12 Usc 1710

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lic interest after taking into consideration (1)
the effect of such ratios on the national economy and on conditions in the building industry,
and (2) the availability or unavailability of residential mortgage credit assisted under the Servicemen’s Readjustment Act of 1944, as amended.
(Pub. L. 85–104, title I, § 104, July 12, 1957, 71 Stat.
296; Pub. L. 90–19, § 14(a), May 25, 1967, 81 Stat.
24.)
REFERENCES IN TEXT
The National Housing Act, referred to in text, is act
June 27, 1934, ch. 847, 48 Stat. 1246, as amended, which
is classified principally to this chapter (§ 1701 et seq.).
For complete classification of this Act to the Code, see
section 1701 of this title and Tables.
Amendments by sections 101, 102, and 103 of this act,
referred to in text, refers to amendment of sections
1709(b), (i), 1715k(d)(3), and 1715m(b) of this title by Pub.
L. 85–104. Section 1709(i) of this title was repealed by
Pub. L. 110–289, div. B, title I, § 2120(a)(1), July 30, 2008,
122 Stat. 2835. Section 1715m of this title was repealed
by Pub. L. 110–289, div. B, title I, § 2120(a)(5), July 30,
2008, 122 Stat. 2835.
The Servicemen’s Readjustment Act of 1944, as
amended, referred to in text, is act June 22, 1944, ch.
268, 58 Stat. 284, as amended, which was classified generally to chapter 11C (§§ 693 to 697g) of former Title 38,
Pensions, Bonuses, and Veterans’ Relief, and which was
repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958,
72 Stat. 1273, the first section of which enacted Title 38,
Veterans’ Benefits. For distribution of sections 693 to
697g of former Title 38 to Title 38, Veterans’ Benefits,
see Table preceding section 101 of Title 38, Veterans’
Benefits.
CODIFICATION
Section was enacted as part of the Housing Act of
1957, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Federal Housing Commissioner’’.

§ 1709b. Repealed. Pub. L. 85–364, § 6, Apr. 1, 1958,
72 Stat. 77
Section, Pub. L. 85–104, title VI, § 605, July 12, 1957, 71
Stat. 305, authorized Federal Housing Commissioner
and Administrator of Veterans’ Affairs to fix reasonable limits on charges, fees, and discounts imposed
upon builders, sellers, or purchasers.

§ 1710. Payment of insurance
(a) In general
(1) Authorized claims procedures
The Secretary may, in accordance with this
subsection and terms and conditions prescribed by the Secretary, pay insurance benefits to a mortgagee for any mortgage insured
under section 1709 of this title through any of
the following methods:
(A) Assignment of mortgage
The Secretary may pay insurance benefits
whenever a mortgage has been in a monetary default for not less than 3 full monthly
installments or whenever the mortgagee is
entitled to foreclosure for a nonmonetary
default. Insurance benefits shall be paid pursuant to this subparagraph only upon the assignment, transfer, and delivery to the Secretary of—

§ 1710

(i) all rights and interests arising under
the mortgage;
(ii) all claims of the mortgagee against
the mortgagor or others arising out of the
mortgage transaction;
(iii) title evidence satisfactory to the
Secretary; and
(iv) such records relating to the mortgage transaction as the Secretary may require.
(B) Conveyance of title to property
The Secretary may pay insurance benefits
if the mortgagee has acquired title to the
mortgaged property through foreclosure or
has otherwise acquired such property from
the mortgagor after a default upon—
(i) the prompt conveyance to the Secretary of title to the property which meets
the standards of the Secretary in force at
the time the mortgage was insured and
which is evidenced in the manner provided
by such standards; and
(ii) the assignment to the Secretary of
all claims of the mortgagee against the
mortgagor or others, arising out of mortgage transaction or foreclosure proceedings, except such claims as may have been
released with the consent of the Secretary.
The Secretary may permit the mortgagee to
tender to the Secretary a satisfactory conveyance of title and transfer of possession
directly from the mortgagor or other appropriate grantor, and may pay to the mortgagee the insurance benefits to which it would
otherwise be entitled if such conveyance had
been made to the mortgagee and from the
mortgagee to the Secretary.
(C) Claim without conveyance of title
The Secretary may pay insurance benefits
upon sale of the mortgaged property at foreclosure where such sale is for at least the
fair market value of the property (with appropriate adjustments), as determined by
the Secretary, and upon assignment to the
Secretary of all claims referred to in clause
(ii) of subparagraph (B).
(D) Preforeclosure sale
The Secretary may pay insurance benefits
upon the sale of the mortgaged property by
the mortgagor after default and the assignment to the Secretary of all claims referred
to in clause (ii) of subparagraph (B), if—
(i) the sale of the mortgaged property
has been approved by the Secretary;
(ii) the mortgagee receives an amount at
least equal to the fair market value of the
property (with appropriate adjustments),
as determined by the Secretary; and
(iii) the mortgagor has received an appropriate disclosure, as determined by the
Secretary.
(2) Payment for loss mitigation
The Secretary may pay insurance benefits to
the mortgagee to recompense the mortgagee
for all or part of any costs of the mortgagee
for taking loss mitigation actions that provide
an alternative to foreclosure of a mortgage
that is in default or faces imminent default, as

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defined by the Secretary (including but not
limited to actions such as special forbearance,
loan modification, support for borrower housing counseling, partial claims, borrower incentives, preforeclosure sale, and deeds in lieu of
foreclosure, but not including assignment of
mortgages to the Secretary under section subsection 1 (a)(1)(A) or section 1715u(c) of this
title). No actions taken under this paragraph,
nor any failure to act under this paragraph, by
the Secretary or by a mortgagee shall be subject to judicial review.
(3) Determination of claims procedure
The Secretary shall publish guidelines for
determining which of the procedures for payment of insurance under paragraph (1) are
available to a mortgagee when it claims insurance benefits. At least one of the procedures
for payment of insurance benefits specified in
paragraph (1)(A) or (1)(B) shall be available to
a mortgagee with respect to a mortgage, but
the same procedure shall not be required to be
available for all of the mortgages held by a
mortgagee.
(4) Servicing of assigned mortgages
If a mortgage is assigned to the Secretary
under paragraph (1)(A), the Secretary may
permit the assigning mortgagee or its servicer
to continue to service the mortgage for reasonable compensation and on terms and conditions determined by the Secretary. Neither
the Secretary nor any servicer of the mortgage shall be required to forbear from collection of amounts due under the mortgage or
otherwise pursue loss mitigation measures.
(5) Calculation of insurance benefits
Insurance benefits shall be paid in accordance with section 1735d of this title and shall
be equal to the original principal obligation of
the mortgage (with such additions and deductions as the Secretary determines are appropriate) which was unpaid upon the date of—
(A) assignment of the mortgage to the Secretary;
(B) the institution of foreclosure proceedings;
(C) the acquisition of the property after
default other than by foreclosure; or
(D) sale of the mortgaged property by the
mortgagor.
(6) Forbearance and recasting after default
The mortgagee may, upon such terms and
conditions as the Secretary may prescribe—
(A) extend the time for the curing of the
default and the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, to such
time as the mortgagee determines is necessary and desirable to enable the mortgagor
to complete the mortgage payments, including an extension of time beyond the stated
maturity of the mortgage, and in the event
of a subsequent foreclosure or acquisition of
the property by other means the Secretary
may include in the amount of insurance benefits an amount equal to any unpaid mortgage interest; or
1 So

in original.

Page 594

(B) provide for a modification of the terms
of the mortgage for the purpose of recasting,
over the remaining term of the mortgage or
over such longer period pursuant to guidelines as may be prescribed by the Secretary,
the total unpaid amount then due, with the
modification to become effective currently
or to become effective upon the termination
of an agreed-upon extension of the period for
curing the default; and the principal amount
of the mortgage, as modified, shall be considered the ‘‘original principal obligation of
the mortgage’’ for purposes of paragraph (5).
(7) Termination of premium obligation
The obligation of the mortgagee to pay the
premium charges for insurance shall cease
upon fulfillment of the appropriate requirements under which the Secretary may pay insurance benefits, as described in paragraph (1).
The Secretary may also terminate the mortgagee’s obligation to pay mortgage insurance
premiums upon receipt of an application filed
by the mortgagee for insurance benefits under
paragraph (1), or in the event the contract of
insurance is terminated pursuant to section
1715t of this title.
(8) Effect on payment of insurance benefits
under section 1715u
Nothing in this section shall limit the authority of the Secretary to pay insurance benefits under section 1715u of this title.
(9) Treatment of mortgage assignment program
Notwithstanding any other provision of law,
or the Amended Stipulation entered as a consent decree on November 8, 1979, in Ferrell v.
Cuomo, No. 73 C 334 (N.D. Ill.), or any other
order intended to require the Secretary to operate the program of mortgage assignment
and forbearance that was operated by the Secretary pursuant to the Amended Stipulation
and under the authority of section 1715u of
this title, prior to its amendment by section
407(b) of The Balanced Budget Downpayment
Act, I (Public Law 104–99; 110 Stat. 45), no
mortgage assigned under this section may be
included in any mortgage foreclosure avoidance program that is the same or substantially equivalent to such a program of mortgage assignment and forbearance.
(b) Consent to release of mortgagor or property
The Secretary may at any time, under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(c) Debentures; form and amounts
Debentures issued under this section—
(1) shall be in such form and amounts;
(2) shall be subject to such terms and conditions;
(3) shall include such provisions for redemption, if any, as may be prescribed by the Secretary of Housing and Urban Development,
with the approval of the Secretary of the
Treasury; and
(4) may be in book entry or certificated registered form, or such other form as the Sec-

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retary of Housing and Urban Development
may prescribe in regulations.
(d) Debentures; issuance; negotiability; terms;
tax exemptions
The debentures issued under this section to
any mortagee 2 with respect to mortgages insured under section 1709 of this title shall be issued in the name of the Mutual Mortgage Insurance Fund as obligor and shall be negotiable,
and, if in book entry form, transferable, in the
manner described by the Secretary in regulations. All such debentures shall be dated as of
the date foreclosure proceedings were instituted,
or the property was otherwise acquired by the
mortgagee after default: Provided, That debentures issued pursuant to claims for insurance
filed on or after September 2, 1964 shall be dated
as of the date of default or as of such later date
as the Secretary, in his discretion, may establish by regulation. The debentures shall bear interest from such date at a rate established by
the Secretary pursuant to section 1715o of this
title, payable semiannually on the 1st day of
January and the 1st day of July of each year,
and shall mature twenty years after the date
thereof. Such debentures as are issued in exchange for property covered by mortgages insured under section 1709 or section 1713 of this
title prior to February 3, 1938 shall be subject
only to such Federal, State, and local taxes as
the mortgages in exchange for which they are issued would be subject to in the hands of the
holder of the debentures and shall be a liability
of the Mutual Mortgage Insurance Fund, but
such debentures shall be fully and unconditionally guaranteed as to principal and interest by
the United States; but any mortgagee entitled
to receive any such debentures may elect to receive in lieu thereof a cash adjustment and debentures issued as hereinafter provided and
bearing the current rate of interest. Such debentures as are issued in exchange for property covered by the mortgages insured after February 3,
1938, shall be exempt, both as to principal and
interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by
any State, county, municipality, or local taxing
authority; and such debentures shall be paid out
of the Mutual Mortgage Insurance Fund, which
shall be primarily liable therefor, and they shall
be fully and unconditionally guaranteed as to
principal and interest by the United States, and,
in the case of debentures issued in certificated
registered form, such guaranty shall be expressed on the face of the debentures. In the
event that the Mutual Mortgage Insurance Fund
fails to pay upon demand, when due, the principal of or interest on any debentures issued
under this section, the Secretary of the Treasury shall pay to the holders the amount thereof
which is authorized to be appropriated, out of
any money in the Treasury not otherwise appropriated, and thereupon to the extent of the
amount so paid the Secretary of the Treasury
2 So

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

§ 1710

shall succeed to all the rights of the holders of
such debentures.
(e) Certificate of claim
(1) Subject to paragraph (2), the certificate of
claim issued by the Secretary to any mortgagee
shall be for an amount which the Secretary determines to be sufficient, when added to the face
value of the debentures issued and the cash adjustment paid to the mortgagee, to equal the
amount which the mortgagee would have received if, at the time of the conveyance to the
Secretary of the property covered by the mortgage, the mortgagor had redeemed the property
and paid in full all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in connection
with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and
the conveyance thereof to the Secretary. Each
such certificate of claim shall provide that there
shall accrue to the holder of such certificate
with respect to the face amount of such certificate, an increment at the rate of 3 per centum
per annum which shall not be compounded. The
amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (f) of this section.
(2) A certificate of claim shall not be issued
and the provisions of paragraph (1) of this subsection shall not be applicable in the case of a
mortgage accepted for insurance pursuant to a
commitment issued on or after September 2,
1964.
(f) Division of excess proceeds; settlement of certificates of claims and refunds to mortgagors
(1) If, after deducting (in such manner and
amount as the Secretary shall determine to be
equitable and in accordance with sound accounting practice) the expenses incurred by the Secretary, the net amount realized from any property conveyed to the Secretary under this section and the claims assigned therewith exceed
the face value of the debentures issued and the
cash paid in exchange for such property plus all
interest paid on such debentures, such excess
shall be divided as follows:
(i) If such excess is greater than the total
amount payable under the certificate of claim
issued in connection with such property, the
Secretary shall pay to the holder of such certificate the full amount so payable, and any
excess remaining thereafter shall be paid to
the mortgagor of such property if the mortgage was insured under section 1709 of this
title: Provided, That on and after September 2,
1964, any excess remaining after payment to
the holder of the full amount of the certificate
of claim, together with the accrued interest
increment thereon, shall be retained by the
Secretary and credited to the applicable insurance fund; and
(ii) If such excess is equal to or less than the
total amount payable under such certificate of
claim, the Secretary shall pay to the holder of
such certificate the full amount of such excess.
(2) Notwithstanding any other provisions of
this section, the Secretary is authorized, with
respect to mortgages insured pursuant to com-

§ 1710

TITLE 12—BANKS AND BANKING

mitments for insurance issued after August 11,
1955, and, with the consent of the mortgagee or
mortgagor, as the case may be, with respect to
mortgages insured pursuant to commitments issued prior to such date, to effect the settlement
of certificates of claim and refunds to mortgagors at any time after the sale or transfer of
title to the property conveyed to the Secretary
under this section and without awaiting the
final liquidation of such property for the purpose of determining the net amount to be realized therefrom: Provided, That the settlement
authority created by the Housing Amendments
of 1955 shall be terminated with respect to any
certificates of claim outstanding as of September 2, 1964.
(3) With the consent of the holder thereof, the
Secretary is authorized, without awaiting the
final liquidation of the Secretary’s interest in
the property, to settle any certificate of claim
issued pursuant to subsection (e) of this section,
with respect to which settlement had not been
effected prior to September 2, 1964, by making
payment in cash to the holder thereof of such
amount not exceeding the face amount of the
certificate of claim, together with the accrued
interest thereon, as the Secretary may consider
appropriate: Provided, That in any case where
the certificate of claim is settled in accordance
with the provisions of this paragraph, any
amounts realized after September 2, 1964, in the
liquidation of the Secretary’s interest in the
property, shall be retained by the Secretary and
credited to the applicable insurance fund.
(g) Handling and disposal of property; settlement
of claims
Notwithstanding any other provision of law
relating to the acquisition, handling, or disposal
of real property by the United States, the Secretary shall have power to deal with, complete,
rent, renovate, modernize, insure, or sell for
cash or credit, in his discretion, any properties
conveyed to him in exchange for debentures and
certificates of claim as provided in this section;
and notwithstanding any other provision of law,
the Secretary shall also have power to pursue to
final collection, by way of compromise or otherwise, all claims against mortgagors assigned by
mortgagees to the Secretary as provided in this
section: Provided, That section 6101 of title 41
shall not be construed to apply to any contract
for hazard insurance, or to any purchase or contract for services or supplies on account of such
property if the amount thereof does not exceed
$1,000. The Secretary shall, by regulation, carry
out a program of sales of such properties and
shall develop and implement appropriate credit
terms and standards to be used in carrying out
the program. The power to convey and to execute in the name of the Secretary deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real or personal property
or any interest therein heretofore or hereafter
acquired by the Secretary pursuant to the provisions of this chapter, may be exercised by an officer appointed by him, without the execution of
any express delegation of power or power of attorney: Provided, That nothing in this subsection shall be construed to prevent the Sec-

Page 596

retary from delegating such power by order or
by power of attorney, in his discretion, to any
officer, agent, or employee he may appoint: And
provided further, That a conveyance or transfer
of title to real or personal property or an interest therein to the Secretary of Housing and
Urban Development, his successors and assigns,
without identifying the Secretary therein, shall
be deemed a proper conveyance or transfer to
the same extent and of like effect as if the Secretary were personally named in such conveyance or transfer. The Secretary may sell real
and personal property acquired by the Secretary
pursuant to the provisions of this chapter on
such terms and conditions as the Secretary may
prescribe.
(h) Disposition of assets in revitalization areas
(1) In general
The purpose of this subsection is to require
the Secretary to carry out a program under
which eligible assets (as such term is defined
in paragraph (2)) shall be made available for
sale in a manner that promotes the revitalization, through expanded homeownership opportunities, of revitalization areas. Notwithstanding the authority under the last sentence
of subsection (g) of this section, the Secretary
shall dispose of all eligible assets under the
program and shall establish the program in accordance with the requirements under this
subsection.
(2) Eligible assets
For purposes of this subsection, the term
‘‘eligible asset’’ means any of the following
categories of assets of the Secretary, unless
the Secretary determines at any time that the
asset property is economically or otherwise
infeasible to rehabilitate or that the best use
of the asset property is as open space (including park land):
(A) Properties
Any property that—
(i) is designed as a dwelling for occupancy by 1 to 4 families;
(ii) is located in a revitalization area;
(iii) was previously subject to a mortgage insured under the provisions of this
chapter; and
(iv) is owned by the Secretary pursuant
to the payment of insurance benefits under
this chapter.
(B) Mortgages
Any mortgage that—
(i) is an interest in a property that meets
the requirements of clauses (i) and (ii) of
subparagraph (A);
(ii) was previously insured under the provisions of this chapter except for mortgages insured under or made pursuant to
sections 1715z, 1715z–12, or 1715z–20 of this
title; and
(iii) is held by the Secretary pursuant to
the payment of insurance benefits under
this chapter.
For purposes of this subsection, an asset
under this subparagraph shall be considered
to be located in a revitalization area, or in
the asset control area of a preferred pur-

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TITLE 12—BANKS AND BANKING

chaser, if the property described in clause (i)
is located in such area.
(3) Revitalization areas
The Secretary shall designate areas as revitalization areas for purposes of this subsection. Before designation of an area as a revitalization area, the Secretary shall consult
with affected units of general local government, States, and Indian tribes and interested
nonprofit organizations. The Secretary may
designate as revitalization areas only areas
that meet one of the following requirements:
(A) Very-low income area
The median household income for the area
is less than 60 percent of the median household income for—
(i) in the case of any area located within
a metropolitan area, such metropolitan
area; or
(ii) in the case of any area not located
within a metropolitan area, the State in
which the area is located.
(B) High concentration of eligible assets
A high rate of default or foreclosure for
single family mortgages insured under this
chapter has resulted, or may result, in the
area—
(i) having a disproportionately high concentration of eligible assets, in comparison
with the concentration of such assets in
surrounding areas; or
(ii) being detrimentally impacted by eligible assets in the vicinity of the area.
(C) Low home ownership rate
The rate for home ownership of single family homes in the area is substantially below
the rate for homeownership in the metropolitan area.
(4) Preference for sale to preferred purchasers
The Secretary shall provide a preference,
among prospective purchasers of eligible assets, for sale of such assets to any purchaser
who—
(A) is—
(i) the unit of general local government,
State, or Indian tribe having jurisdiction
with respect to the area in which are located the eligible assets to be sold; or
(ii) a nonprofit organization;
(B) in making a purchase under the program under this subsection—
(i) establishes an asset control area,
which shall be an area that consists of part
or all of a revitalization area; and
(ii) purchases all assets of the Secretary
in the category or categories of eligible assets set forth in the sale agreement required under paragraph (7) that, at any
time during the period which shall be set
forth in the sale agreement—
(I) are or become eligible for purchase
under this subsection; and
(II) are located in the asset control
area of the purchaser; and
(C) has the capacity to carry out the purchase of the category or categories of eligible assets set forth in the sale agreement

§ 1710

under the program under this subsection and
under the provisions of this paragraph.
(5) Agreements required for purchase
(A) Preferred purchasers
Under the program under this subsection,
the Secretary may sell an eligible asset as
provided in paragraph (4) to a preferred purchaser only pursuant to a binding agreement
by the preferred purchaser that the eligible
asset will be used in conjunction with a
home ownership plan that provides as follows:
(i) The plan has as its primary purpose
the expansion of home ownership in, and
the revitalization of, the asset control
area, established pursuant to paragraph
(4)(B)(i) by the purchaser, in which the eligible asset is located.
(ii) Under the plan, the preferred purchaser has established, and agreed to
meet, specific performance goals for increasing the rate of home ownership for eligible assets in the asset control area that
are under the purchaser’s control. The
plan shall provide that the Secretary may
waive or modify such goals or deadlines
only upon a determination by the Secretary that a good faith effort has been
made in complying with the goals through
the homeownership plan and that exceptional neighborhood conditions prevented
attainment of the goal.
(iii) Under the plan, the preferred purchaser has established rehabilitation
standards that meet or exceed the standards for housing quality established under
subparagraph (B)(iii) by the Secretary, and
has agreed that each asset property for an
eligible asset purchased will be rehabilitated in accordance with such standards.
(B) Non-preferred purchasers
Under the program under this subsection,
the Secretary may sell an eligible asset to a
purchaser who is not a preferred purchaser
only pursuant to a binding agreement by the
purchaser that complies with the following
requirements:
(i) The purchaser has agreed to meet specific performance goals established by the
Secretary for home ownership of the asset
properties for the eligible assets purchased
by the purchaser, except that the Secretary may, by including a provision in the
sale agreement required under paragraph
(7), provide for a lower rate of home ownership in sales involving exceptional circumstances.
(ii) The purchaser has agreed that each
asset property for an eligible asset purchased will be rehabilitated to comply
with minimum standards for housing quality established by the Secretary for purposes of the program under this subsection.
(6) Discount for preferred purchasers
(A) In general
For the purpose of providing a public purpose discount for the bulk sales of eligible

§ 1710

TITLE 12—BANKS AND BANKING

assets made under the program under this
subsection by preferred purchasers, each eligible asset sold through the program under
this subsection to a preferred purchaser
shall be sold at a price that is discounted
from the value of the asset, as based on the
appraised value of the asset property (as
such term is defined in paragraph (8)).
(B) Appraisals
The Secretary shall require that each appraisal of an eligible asset under this paragraph is based upon—
(i) the market value of the asset property in its ‘‘as is’’ physical condition,
which shall take into consideration age
and condition of major mechanical and
structural systems; and
(ii) the value of the property appraised
for home ownership.
(C) Discounts
The Secretary, in the sole discretion of the
Secretary, shall establish the discount under
this paragraph for an eligible asset. In determining the discount, the Secretary may consider the condition of the asset property, the
extent of resources available to the preferred
purchaser, the comprehensive revitalization
plan undertaken by such purchaser, the financial safety and soundness of the Mutual
Mortgage Insurance Fund, and any other circumstances the Secretary considers appropriate 3
(7) Sale agreement
The Secretary may sell an eligible asset
under this subsection only pursuant to a sale
agreement entered into under this paragraph
with the purchaser, which shall include the
following provisions:
(A) Assets
The sale agreement shall identify the category or categories of eligible assets to be
purchased and, based on the purchaser’s capacity to manage and dispose of assets, the
maximum number of assets owned by the
Secretary at the time the sale agreement is
executed that shall be sold to the purchaser.
(B) Revitalization area and asset control area
The sale agreement shall identify—
(i) the boundaries of the specific revitalization areas (or portions thereof) in which
are located the eligible assets that are covered by the agreement; and
(ii) in the case of a preferred purchaser,
the asset control area established pursuant
to paragraph (4)(B)(i) that is covered by
the agreement.
(C) Financing
The sale agreement shall identify the
sources of financing for the purchase of the
eligible assets.
(D) Binding agreements
The sale agreement shall contain binding
agreements by the purchaser sufficient to
comply with—
3 So

in original. There probably should be a period.

Page 598

(i) in the case of a preferred purchaser,
the requirements under paragraph (5)(A),
which agreements shall provide that the
eligible assets purchased will be used in
conjunction with a home ownership plan
meeting the requirements of such paragraph, and shall set forth the terms of the
homeownership plan, including—
(I) the goals of the plan for the eligible
assets purchased and for the asset control area subject to the plan;
(II) the revitalization areas (or portions thereof) in which the homeownership plan is operating or will operate;
(III) the specific use or disposition of
the eligible assets under the plan; and
(IV) any activities to be conducted and
services to be provided under the plan; or
(ii) in the case of a purchaser who is not
a preferred purchaser, the requirements
under paragraph (5)(B).
(E) Purchase price and discount
The sale agreement shall establish the
purchase price of the eligible assets, which
in the case of a preferred purchaser shall
provide for a discount in accordance with
paragraph (6).
(F) Housing quality
The sale agreement shall provide for compliance of the eligible assets purchased with
the rehabilitation standards established
under paragraph (5)(A)(iii) or the minimum
standards for housing quality established
under paragraph (5)(B)(ii), as applicable, and
shall specify such standards.
(G) Performance goals and sanctions
The sale agreement shall set forth the specific performance goals applicable to the
purchaser, in accordance with paragraph (5),
shall set forth any sanctions for failure to
meet such goals and deadlines, and shall require the purchaser to certify compliance
with such goals.
(H) Period covered
The sale agreement shall establish—
(i) in the case of a preferred purchaser,
the time period referred to in paragraph
(4)(B)(ii); and
(ii) in the case of a purchaser who is not
a preferred purchaser, the time period for
purchase of eligible assets that may be
covered by the purchase.
(I) Other terms
The agreement shall contain such other
terms and conditions as may be necessary to
require that eligible assets purchased under
the agreement are used in accordance with
the program under this subsection.
(8) Definitions
For purposes of this subsection, the following definitions shall apply:
(A) Asset control area
The term ‘‘asset control area’’ means the
area established by a preferred purchaser
pursuant to paragraph (4)(B)(i).
(B) Asset property
The term ‘‘asset property’’ means—

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(i) with respect to an eligible asset that
is a property, such property; and
(ii) with respect to an eligible asset that
is a mortgage, the property that is subject
to the mortgage.
(C) Eligible asset
The term ‘‘eligible asset’’ means an asset
described in paragraph (2).
(D) Nonprofit organization
The term ‘‘nonprofit organization’’ means
a private organization that—
(i) is organized under State or local laws;
(ii) has no part of its net earnings inuring to the benefit of any member, shareholder, founder, contributor, or individual;
and
(iii) complies with standards of financial
responsibility that the Secretary may require.
(E) Preferred purchaser
The term ‘‘preferred purchaser’’ means a
purchaser described in paragraph (4).
(F) Unit of general local government
The term ‘‘unit of general local government’’ means any city, town, township,
county, parish, village, or other general purpose political subdivision of a State, and any
agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act
on behalf of the jurisdiction with regard to
the provisions of this subsection.
(G) State
The term ‘‘State’’ means any State of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, Guam,
American Samoa, the Virgin Islands, the
Northern Mariana Islands, or any agency or
instrumentality thereof that is established
pursuant to legislation and designated by
the chief executive officer to act on behalf of
the State with regard to provisions of this
subjection.4
(H) Indian tribe
The term ‘‘Indian tribe’’ has the same
meaning as in section 1715z–13(i)(I) 5 of this
title.
(9) Secretary’s discretion
The Secretary shall have the authority to
implement and administer the program under
this subsection in such manner as the Secretary may determine. The Secretary may, in
the sole discretion of the Secretary, enter into
contracts to provide for the proper administration of the program with such public or
nonprofit entities as the Secretary determines
are qualified.
(10) Regulations
The Secretary shall issue regulations to implement the program under this subsection
through rulemaking in accordance with the
procedures established under section 553 of
title 5 regarding substantive rules. Such regu4 So
5 So

in original. Probably should be ‘‘subsection.’’
in original. Probably should be section ‘‘1715z–13(i)(1)’’.

§ 1710

lations shall take effect not later than the expiration of the 2-year period beginning on October 21, 1998.
(i) Mortgagor’s or mortgagee’s interest in property or claim conveyed
No mortgagee or mortgagor shall have, and no
certificate of claim shall be construed to give to
any mortgagee or mortgagor, any right or interest in any property conveyed to the Secretary or
in any claim assigned to him; nor shall the Secretary owe any duty to any mortgagee or mortgagor with respect to the handling or disposal of
any such property or the collection of any such
claim.
(j) Foreclosure; payment and cessation of obligation
In the event that any mortgagee under a mortgage insured under section 1709 of this title
(other than a mortgagee receiving insurance
benefits under clause (1)(A) of the second sentence of subsection (a) of this section) forecloses
on the mortgaged property but does not convey
such property to the Secretary in accordance
with this section, and the Secretary is given
written notice thereof, or in the event that the
mortgagor pays the obligation under the mortgage in full prior to the maturity thereof, and
the mortgagee pays any adjusted premium
charge required under the provisions of section
1709(c) of this title, and the Secretary is given
written notice by the mortgagee of the payment
of such obligation, the obligation to pay any
subsequent premium charge for insurance shall
cease, and all rights of the mortgagee and the
mortgagor under this section shall terminate as
of the date of such notice.
(k) Repealed. Pub. L. 105–276, title VI, § 601(c),
Oct. 21, 1998, 112 Stat. 2673
(l) Nullification of right of redemption of single
family mortgagors
(1) Whenever the Secretary or a contract
mortgagee (pursuant to its contract with the
Secretary) forecloses on a Secretary-held single
family mortgage in any Federal or State court
or pursuant to a power of sale in a mortgage, the
purchaser at the foreclosure sale shall be entitled to receive a conveyance of title to, and possession of, the property, subject to the interests
senior to the interests of the Secretary or the
contract mortgagee, as the case may be. Notwithstanding any State law to the contrary,
there shall be no right of redemption (including
in all instances any right to possession based
upon any right of redemption) in the mortgagor
or any other person subsequent to the foreclosure sale in connection with a Secretary-held
single family mortgage. The appropriate State
official or the trustee, as the case may be, shall
execute and deliver a deed or other appropriate
instrument conveying title to the purchaser at
the foreclosure sale, consistent with applicable
procedures in the jurisdiction and without regard to any such right of redemption.
(2) The following actions shall be taken in
order to verify title in the purchaser at the foreclosure sale:
(A) In the case of a judicial foreclosure in
any Federal or State court, there shall be in-

§ 1710

TITLE 12—BANKS AND BANKING

cluded in the petition and in the judgment of
foreclosure a statement that the foreclosure is
in accordance with this subsection and that
there is no right of redemption in the mortgagor or any other person.
(B) In the case of a foreclosure pursuant to
a power of sale provision in the mortgage, the
statement required in subparagraph (A) shall
be included in the advertisement of the sale
and either in the recitals of the deed or other
appropriate instrument conveying title to the
purchaser at the foreclosure sale or in an affidavit or addendum to the deed.
(3) For purposes of this subsection:
(A) The term ‘‘contract mortgagee’’ means a
person or entity under a contract with the
Secretary that provides for the assignment of
a single-family mortgage from the Secretary
to the person or entity for the purpose of pursuing foreclosure.
(B) the 6 term ‘‘mortgage’’ means a deed of
trust, mortgage, deed to secure debt, security
agreement, or any other form of instrument
under which any interest in property, real,
personal, or mixed, or any interest in property, including leaseholds, life estates, reversionary interests, and any other estates under
applicable State law, is conveyed in trust,
mortgaged, encumbered, pledged, or otherwise
rendered subject to a lien, for the purpose of
securing the payment of money or the performance of an obligation.
(C) The term ‘‘Secretary-held single family
mortgage’’ means a single-family mortgage
held by the Secretary or by a contract mortgagee at the time of initiation of foreclosure
that—
(i) was formerly insured by the Secretary
under any section of this subchapter; or
(ii) was taken by the Secretary as a purchase money mortgage in connection with
the sale or other transfer of Secretaryowned property under any section of this
subchapter.
(D) the term ‘‘single-family mortgage’’
means a mortgage that covers property on
which is located a 1-to-4 family residence.
(June 27, 1934, ch. 847, title II, § 204, 48 Stat. 1249;
May 28, 1935, ch. 150, § 29(c), 49 Stat. 300; Feb. 19,
1937, ch. 12, 50 Stat. 20; Feb. 3, 1938, ch. 13, § 3, 52
Stat. 12; June 3, 1939, ch. 175, §§ 9, 10, 53 Stat. 806;
June 28, 1941, ch. 261, § 9, 55 Stat. 365; Oct. 14,
1943, ch. 258, § 1, 57 Stat. 570; Aug. 10, 1948, ch. 832,
title I, § 101(l), (q), 62 Stat. 1273, 1274; Apr. 20,
1950, ch. 94, title I, §§ 105, 122, 64 Stat. 52, 59; Sept.
1, 1951, ch. 378, title VI, § 604(a), 65 Stat. 314; Aug.
2, 1954, ch. 649, title I, §§ 111, 112(a), 113, 68 Stat.
593, 594; Aug. 11, 1955, ch. 783, title I, § 102(a), 69
Stat. 635; Pub. L. 85–104, title I, §§ 107, 108(a),
July 12, 1957, 71 Stat. 297; Pub. L. 86–372, title I,
§§ 114(b), 117, Sept. 23, 1959, 73 Stat. 662, 664; Pub.
L. 87–70, title VI, § 612(b), (c), June 30, 1961, 75
Stat. 180; Pub. L. 88–560, title I, §§ 104(a), 105(a),
Sept. 2, 1964, 78 Stat. 769, 770; Pub. L. 89–117, title
XI, § 1108(d), Aug. 10, 1965, 79 Stat. 504; Pub. L.
90–19, § 1(a)(2), (3), (4), (d), May 25, 1967, 81 Stat.
17, 18; Pub. L. 98–181, title IV, § 426, Nov. 30, 1983,
97 Stat. 1218; Pub. L. 100–242, title V, § 569, Feb.
6 So

in original. Probably should be capitalized.

Page 600

5, 1988, 101 Stat. 1948; Pub. L. 100–628, title X,
§ 1064(a), (b), Nov. 7, 1988, 102 Stat. 3275; Pub. L.
101–235, title I, § 136, Dec. 15, 1989, 103 Stat. 2028;
Pub. L. 102–550, title V, § 516(a), Oct. 28, 1992, 106
Stat. 3790; Pub. L. 104–99, title IV, § 407(a), Jan.
26, 1996, 110 Stat. 45; Pub. L. 104–134, title I,
§ 101(e) [title II, § 221(a)], Apr. 26, 1996, 110 Stat.
1321–257, 1321–290; renumbered title I, Pub. L.
104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L.
105–276, title VI, §§ 601(a), (c), (d), 602, Oct. 21,
1998, 112 Stat. 2670, 2673, 2674; Pub. L. 108–447, div.
I, title II, § 221, Dec. 8, 2004, 118 Stat. 3320; Pub.
L. 111–22, div. A, title II, § 203(c), May 20, 2009, 123
Stat. 1644.)
REFERENCES IN TEXT
The Housing Amendments of 1955, referred to in subsec. (f)(2), is act Aug. 11, 1955, ch. 783, 69 Stat. 635, as
amended. For complete classification of this Act to the
Code, see Short Title of 1955 Amendments note set out
under section 1701 of this title and Tables.
This chapter, referred to in subsecs. (g) and (h), was
in the original ‘‘this Act’’, meaning act June 27, 1934,
ch. 847, 48 Stat. 1246, which is classified principally to
this chapter (§ 1701 et seq.). For complete classification
of this Act to the Code, see Tables.
CODIFICATION
In subsec. (g), ‘‘section 6101 of title 41’’ substituted
for ‘‘section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
AMENDMENTS
2009—Subsec. (a)(2). Pub. L. 111–22, § 203(c)(3), substituted ‘‘subsection (a)(1)(A) or section 1715u(c) of this
title’’ for ‘‘paragraph (1)(A)’’.
Pub. L. 111–22, § 203(c)(1), (2), inserted ‘‘or faces imminent default, as defined by the Secretary’’ after ‘‘default’’ and ‘‘support for borrower housing counseling,
partial claims, borrower incentives, preforeclosure
sale,’’ after ‘‘loan modification,’’.
2004—Subsec. (h)(2). Pub. L. 108–447, § 221(1)(A), substituted ‘‘following categories of assets of the Secretary, unless the Secretary determines at any time
that the asset property is economically or otherwise infeasible to rehabilitate or that the best use of the asset
property is as open space (including park land)’’ for
‘‘following assets of the Secretary’’ in introductory
provisions.
Subsec. (h)(2)(B)(ii). Pub. L. 108–447, § 221(1)(B), inserted ‘‘except for mortgages insured under or made
pursuant to sections 1715z, 1715z–12, or 1715z–20 of this
title’’ after ‘‘chapter’’.
Subsec. (h)(2)(C). Pub. L. 108–447, § 221(1)(C), struck
out heading and text of subpar. (C). Text read as follows: ‘‘Any contingent future interest of the Secretary
in an asset described in subparagraph (A) or (B).’’
Subsec. (h)(3). Pub. L. 108–447, § 221(2), inserted
‘‘, States, and Indian tribes’’ after ‘‘government’’ in
second sentence.
Subsec. (h)(4)(A)(i). Pub. L. 108–447, § 221(3)(A), inserted ‘‘, State, or Indian tribe’’ after ‘‘government’’.
Subsec. (h)(4)(B)(ii). Pub. L. 108–447, § 221(3)(B),
amended cl. (ii) generally. Prior to amendment, cl. (ii)
read as follows: ‘‘purchases all interests of the Secretary in all assets of the Secretary that, at any time
during the period which shall be set forth in the sale
agreement required under paragraph (7)—
‘‘(I) are or become eligible assets; and
‘‘(II) are located in the asset control area of the
purchaser; and’’.
Subsec. (h)(4)(C). Pub. L. 108–447, § 221(3)(C), substituted ‘‘purchase of the category or categories of eligible assets set forth in the sale agreement under’’ for
‘‘purchase of eligible assets under’’.
Subsec. (h)(6)(C). Pub. L. 108–447, § 221(4)(A), amended
heading and text of subpar. (C) generally. Prior to

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amendment, subpar. (C) set out discount classes, including standard, deep, and minimal discounts.
Subsec. (h)(6)(D). Pub. L. 108–447, § 221(4)(B), struck
out heading and text of subpar. (D). Text read as follows: ‘‘The Secretary shall, in the sole discretion of the
Secretary, establish a method for determining which
discount under clause (i) or (ii) subparagraph (C) shall
be provided for an eligible asset that is described in
such clause (i) and sold to a preferred purchaser. The
method may result in the assignment of discounts on
any basis consistent with subparagraph (C) that the
Secretary considers appropriate to carry out the purposes of this subsection.’’
Subsec. (h)(7)(A). Pub. L. 108–447, § 221(5), substituted
‘‘category or categories of eligible assets to be purchased and, based on the purchaser’s capacity to manage and dispose of assets, the maximum number of assets owned by the Secretary at the time the sale agreement is executed that shall be sold to the purchaser’’
for ‘‘eligible assets to be purchased and the interests
sold’’.
Subsec. (h)(8)(F). Pub. L. 108–447, § 221(6)(A), inserted
‘‘, and any agency or instrumentality thereof that is
established pursuant to legislation and designated by
the chief executive officer to act on behalf of the jurisdiction with regard to the provisions of this subsection’’ after ‘‘State’’.
Subsec. (h)(8)(G), (H). Pub. L. 108–447, § 221(6)(B),
added subpars. (G) and (H).
1998—Subsec. (a). Pub. L. 105–276, § 601(a), inserted
heading and amended text generally, substituting
present provisions for provisions which authorized
mortgagee of foreclosed property to receive insurance
benefit upon conveyance to Secretary of title and assignment of claims, or upon foreclosure sale or approved sale after default where at least fair market
value was received, set maintenance of property as condition of receipt of benefit, provided that obligation to
pay premium would cease upon conveyance and assignment and debentures would issue having par value
equal to value of mortgage, and set forth provisions detailing amounts to be included in debentures or cash
payment and provisions authorizing extension or modification of mortgage where default was due to circumstances beyond control of mortgagor.
Subsec. (g). Pub. L. 105–276, § 601(d), inserted at end
‘‘The Secretary may sell real and personal property acquired by the Secretary pursuant to the provisions of
this chapter on such terms and conditions as the Secretary may prescribe.’’
Subsecs. (h), (i). Pub. L. 105–276, § 602, added subsec.
(h) and redesignated former subsec. (h) as (i).
Subsec. (k). Pub. L. 105–276, § 601(c), struck out subsec.
(k) which read as follows: ‘‘Notwithstanding any other
provision of this section or of section 1739 or 1750c of
this title and with respect to any debentures issued in
exchange for properties conveyed to and accepted by
the Secretary after September 23, 1959 in accordance
with such sections, the Secretary may (1) include in debentures reasonable payments made by the mortgagee
with the approval of the Secretary for the purpose of
protecting, operating, or preserving the property, and
taxes imposed upon any deed or any other instrument
by which the property was acquired by the mortgagee
and transferred or conveyed to the Secretary; (2) include in debentures as a portion of foreclosure costs (to
the extent that foreclosure costs may be included in
such debentures by any other provision of this chapter)
payments made by the mortgagee for the cost of acquiring the property and conveying and evidencing
title to the property to the Secretary; and (3) terminate the mortgagee’s obligation to pay mortgage insurance premiums upon receipt of an application for debentures filed by the mortgagee, or in the event the
contract of insurance is terminated pursuant to section
1715t of this title.’’
1996—Subsec. (a). Pub. L. 104–134, in penultimate proviso of last sentence, substituted ‘‘special forebearance’’ for ‘‘special foreclosure’’.
Pub. L. 104–99 inserted ‘‘: And provided further, That
the Secretary may pay insurance benefits to the mort-

§ 1710

gagee to recompense the mortgagee for its actions to
provide an alternative to the foreclosure of a mortgage
that is in default, which actions may include special
foreclosure, loan modification, and deeds in lieu of foreclosure, all upon terms and conditions as the mortgagee shall determine in the mortgagee’s sole discretion,
within guidelines provided by the Secretary, but which
may not include assignment of a mortgage to the Secretary: And provided further, That for purposes of the
preceding proviso, no action authorized by the Secretary and no action taken, nor any failure to act, by
the Secretary or the mortgagee shall be subject to judicial review.’’ before period at end of last sentence.
1992—Subsec. (a). Pub. L. 102–550, § 516(a)(1), in fifth
sentence, substituted ‘‘issue to the mortgagee debentures having a par value’’ for ‘‘, subject to the cash adjustment hereinafter provided, issue to the mortgagee
debentures having a total face value’’.
Subsec. (c). Pub. L. 102–550, § 516(a)(2), added subsec.
(c) and struck out former subsec. (c) which read as follows: ‘‘Debentures issued under this section shall be in
such form and denominations in multiples of $50, shall
be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be
prescribed by the Secretary with the approval of the
Secretary of the Treasury, and may be in coupon or
registered form. Any difference between the value of
the mortgage determined as herein provided and the
aggregate face value of the debentures issued, not to
exceed $350, shall be adjusted by the payment of cash
by the Secretary to the mortgagee from the Mutual
Mortgage Insurance Fund.’’
Subsec. (d). Pub. L. 102–550, § 516(a)(3), (4), in first sentence, substituted ‘‘issued in the name of’’ for ‘‘executed in the name of’’ and ‘‘and shall be negotiable,
and, if in book entry form, transferable, in the manner
described by the Secretary in regulations’’ for ‘‘, shall
be signed by the Secretary by either his written or engraved signature, and shall be negotiable’’ and in fifth
sentence, substituted ‘‘and, in the case of debentures issued in certificated registered form, such guaranty’’ for
‘‘and such guaranty’’.
1989—Subsec. (a). Pub. L. 101–235, § 136(a), inserted
after third sentence ‘‘As a condition of the receipt of
such benefits, the mortgagee shall maintain or assure
the maintenance of the mortgaged property (in such
manner as the Secretary shall by regulation provide)
during the period beginning on the taking of the possession or other acquisition of the mortgaged property
by the mortgagee and ending on conveyance to the Secretary or other disposition of the mortgaged property
in accordance with this section, and funds expended by
the mortgagee in meeting such obligation shall be included, to the extent provided in this subsection or in
subsection (k) of this section, in debentures or other insurance payment pursuant to this section.’’
Subsec. (g). Pub. L. 101–235, § 136(b), inserted after
first sentence ‘‘The Secretary shall, by regulation,
carry out a program of sales of such properties and
shall develop and implement appropriate credit terms
and standards to be used in carrying out the program.’’
1988—Subsec. (a). Pub. L. 100–628, § 1064(a)(1), (2), in
second sentence, substituted ‘‘(1)(A) upon sale’’ for ‘‘(1)
upon sale’’, inserted cl. (B), and substituted ‘‘; and (2)’’
for ‘‘, and (2)’’.
Pub. L. 100–628, § 1064(b)(1), in third sentence, substituted ‘‘November 30, 1983 (on or after November 7,
1988, with respect to the payment of benefits under
clause (1)(B) of the preceding sentence),’’ for ‘‘the effective date of this sentence’’.
Pub. L. 100–628, § 1064(b)(2)(A), in fifth sentence,
struck out ‘‘foreclosure’’ before ‘‘sale of the property:
Provided’’.
Subsec. (j). Pub. L. 100–628, § 1064(b)(2)(B), inserted
‘‘clause (1)(A) of’’ before ‘‘the second sentence’’.
Subsec. (l). Pub. L. 100–242 added subsec. (l).
1983—Subsec. (a). Pub. L. 98–181, § 426(a), inserted provision authorizing the Secretary to make the benefit of
the insurance available to the mortgagee upon sale of
the insured property at foreclosure and assignment of

§ 1710

TITLE 12—BANKS AND BANKING

all claims to the Secretary and provision relating to
payment of benefits pursuant to a commitment to insure issued on or after the effective date of this sentence [Nov. 30, 1983], and substituted ‘‘any amount received as rent or other income from the property, less
reasonable expenses incurred in handling the property,
after either of such dates, and, in the case of insurance
benefits paid in accordance with the second sentence of
this section, any amount received upon the foreclosure
sale of the property’’ for ‘‘and any amount received as
rent or other income from the property, less reasonable
expenses incurred in handling the property, after either
of such dates’’.
Subsec. (j). Pub. L. 98–181, § 426(b), inserted ‘‘(other
than a mortgagee receiving insurance benefits under
the second sentence of subsection (a) of this section)’’
after ‘‘section 1709 of this title’’.
1967—Pub. L. 90–19, § 1(a)(2), substituted ‘‘Secretary of
Housing and Urban Development’’ for ‘‘Federal Housing
Commissioner’’ in subsec. (g).
Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’ for
‘‘Commissioner’’ wherever appearing in subsecs. (a) to
(d), (e)(1), (f)(1), (f)(1)(i), (ii), (f)(2), (3), (g), (h), (j), and
(k).
Subsec. (f)(3). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’ wherever appearing.
Subsec. (g). Pub. L. 90–19, § 1(d), substituted ‘‘an officer’’ for ‘‘the Commissioner or by any Assistant Commissioner’’.
1965—Subsec. (a). Pub. L. 89–117, § 1108(d)(1), struck
out reference to section 1715a of this title after reference to section 1709 of this title in first sentence.
Subsec. (c). Pub. L. 89–117, § 1108(d)(2), substituted
‘‘Mutual Mortgage Insurance Fund’’ for ‘‘Fund as to
mortgages insured under section 1709 of this title and
from the Housing Fund as to mortgages insured under
section 1715a of this title’’.
Subsec. (d). Pub. L. 89–117, § 1108(d)(3)–(6), removed all
references to debentures issued with respect to mortgages insured under section 1715a of this title and to
the Housing Insurance Fund and substituted Mutual
Mortgage Insurance Fund for Fund wherever appearing.
Subsec. (f). Pub. L. 89–117, § 1108(d)(7), struck out provision of subpar. (1)(i) calling for retention of excess by
Commissioner and credit to the Housing Insurance
Fund in the case of mortgages insured under section
1713 of this title.
1964—Subsec. (a). Pub. L. 88–560, §§ 104(a), 105(a)(1)–(3),
(6)(B), amended provisions as follows; section 104(a), in
proviso reading ‘‘And provided further, That with respect to any mortgage covering a one-, two-, three-, or
four-family residence’’, struck out ‘‘and it is probable
that the mortgage will be restored to good standing
within a reasonable period of time’’ after ‘‘control of
the mortgagor’’, substituted ‘‘upon such terms and conditions’’ for ‘‘under such regulations and conditions’’,
incorporated authority of Commissioner to ‘‘extend the
time for curing default and enter into an agreement
with the mortgage providing that if the mortgage is
subsequently foreclosed, any interest accruing after the
date of the agreement which is not paid by the mortgagor may be included in the debentures’’ in cl. (1), and
provided for remainder of cl. (1), cl. (2) and consideration of the principal amount of the mortgage, as modified, as the ‘‘original principal obligation of the mortgage’’ for purpose of computing total face value of debentures to be issued or cash payment to be made by
Commissioner to a mortgagee; section 105(a)(1) substituted in third sentence ‘‘charges for the administration, operation, maintenance and repair of communityowned property or the maintenance and repair of the
mortgaged property, the obligation for which arises out
of a covenant filed for record and approved by the Commissioner prior to the insurance of the mortgage, insurance on the mortgaged property, and any mortgage
insurance premiums’’ for ‘‘insurance on the mortgaged
property, and any mortgage insurance premiums paid
after either of such dates’’; section 105(a)(2) inserted
provisos reading ‘‘And provided further, That with respect to a mortgage accepted for insurance pursuant to

Page 602

a commitment issued on or after September 2, 1964, the
Commissioner may include in debentures or in the cash
payment on amount not to exceed the foreclosure, acquisition, and conveyance costs actually paid by the
mortgagee and approved by the Commissioner’’ and
‘‘And provided further, That with respect to a mortgage
accepted for insurance pursuant to a commitment issued prior to September 2, 1964, the Commissioner may,
with the consent of the mortgagee (in lieu of issuing a
certificate of claim as provided in subsection (e)), included in debentures or in the cash payment, in addition to amounts otherwise allowed for such costs, an
amount not to exceed one-third of the total foreclosure,
acquisition, and conveyance costs actually paid by the
mortgagee and approved by the Commissioner, but in
no event may the total allowance for such costs exceed
the amount actually paid by the mortgagee:’’; section
105(a)(3) struck out from proviso reading ‘‘And provided
further, That with respect to mortgages to which the
provisions of sections 532 and 536 of Appendix To Title
50 apply’’ the words ‘‘and the payment of insurance premiums’’ after ‘‘on account of interest on debentures’’
and inserted after such proviso ‘‘And provided further,
That where the claim is paid in cash there shall be included in the cash payment an amount equivalent to
the compensation for loss of debenture interest that
would be included in computing debentures if such
claim were being paid in debentures’’; and section
105(a)(6)(B) substituted ‘‘and (subject to subsection
(e)(2) of this section) a certificate of claim’’ for ‘‘and a
certificate of claim’’ in second sentence.
Subsec. (c). Pub. L. 88–560, § 105(a)(4), increased limitation on the difference between the value of the mortgage and the aggregate face value of the debentures issued from $50 to $350.
Subsec. (d). Pub. L. 88–560, § 105(a)(5), substituted
‘‘: Provided, That debentures issued pursuant to claims
for insurance filed on or after September 2, 1964 shall be
dated as of the date of default or as of such later date
as the Commissioner, in his discretion, may establish
by regulation. The debentures’’ for ‘‘, except that debentures issued pursuant to the provisions of section
1715k(f), 1715l(g), and 1715x of this title may be dated as
of the date the mortgage is assigned (or the property is
conveyed) to the Commissioner, and’’ in second sentence.
Subsec. (e). Pub. L. 88–560, § 105(a)(6)(A), designated
existing provisions as par. (1), substituted ‘‘Subject to
paragraph (2), the certificate’’ for ‘‘The certificate’’,
and added par. (2).
Subsec. (f). Pub. L. 88–560, § 105(a)(7)–(11), designated
introductory par. as par. (1) and substituted ‘‘If, after
deducting (in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound accounting practice) the expenses incurred by the Commissioner, the net amount realized
from any property conveyed to the Commissioner under
this section and the claims assigned therewith exceed
the face value’’ for ‘‘If the net amount realized from
any property conveyed to the Commissioner under this
section and the claims assigned therewith, after deducting all expenses incurred by the Commissioner in
handling, dealing with, and disposing of such property
and in collecting such claims, exceeds the face value’’;
redesignated former par. (1) as (i) and inserted proviso;
redesignated former par. (2) as (ii); designated concluding par. as par. (2) and inserted proviso; and added par.
(3), respectively.
1961—Subsec. (d). Pub. L. 87–70, § 612(b), permitted debentures issued pursuant to provisions of section
1715k(f), 1715l(g), and 1715x of this title to be dated as of
the date the mortgage is assigned (or the property is
conveyed) to the Commissioner.
Subsec. (g). Pub. L. 87–70, § 612(c), included instruments relating to personal property, and inserted proviso requiring that a conveyance or transfer of title to
real or personal property or an interest therein to the
Federal Housing Commissioner, his successors and assigns, without identifying the Commissioner therein,
shall be deemed a proper conveyance or transfer.

Page 603

§ 1710

TITLE 12—BANKS AND BANKING

1959—Subsec. (a). Pub. L. 86–372, § 114(b), authorized
the Commissioner, with respect to any mortgage covering a one-, two-, three-, or four-family residence insured under this chapter, if he finds after notice of default, that the default was due to circumstances beyond
the control of the mortgagor and it is probable that the
mortgage will be restored to good standing within a
reasonable period of time, to extend the time for curing
default and to enter into an agreement with the mortgagee providing that if the mortgage is subsequently
foreclosed, any interest accruing after the date of the
agreement which is not paid by the mortgagor may be
included in the debentures.
Subsec. (k). Pub. L. 86–372, § 117, substituted ‘‘and
with respect to any debentures issued in exchange for
properties conveyed to and accepted by the Commissioner after September 23, 1959 in accordance with such
section’’ for ‘‘with respect to any debentures issued
pursuant to this section or section 1739 or 1750c of this
title’’, and inserted provisions authorizing inclusion as
a portion of the foreclosure costs payments made by
the mortgagee for the cost of acquiring the property
and conveying the evidencing title to the property to
the Commissioner, and permitting the termination of
the mortgagee’s obligation to pay mortgage insurance
premiums in the event the contract of insurance is terminated pursuant to section 1715t of this title.
1957—Subsec. (d). Pub. L. 85–104, § 108(a), substituted
‘‘established by the Commissioner pursuant to section
1715o of this title’’ for ‘‘determined by the Commissioner, with the approval of the Secretary of the Treasury, at the time the mortgage was offered for insurance, but not to exceed 3 per centum per annum’’ in
second sentence.
Subsec. (k). Pub. L. 85–104, § 107, added subsec. (k).
1955—Subsec. (f). Act Aug. 11, 1955, authorized the
Commissioner to effect the settlement of certificates of
claim and refunds to mortgagors.
1954—Subsec. (a). Act Aug. 2, 1954, § 111(l), permitted a
mortgagee to receive in debentures amounts paid by it
for Federal taxes imposed on a deed to it and on a deed
to the Commissioner; (2) substituted, in second proviso,
‘‘or under section 1715e of this title, or with respect to
any mortgage accepted for insurance under section 1709
of this title on or after August 2, 1954,’’ for ‘‘or under
section 1715e of this title’’; and (3) inserted proviso permitting direct conveyances to the Commissioner.
Subsec. (d). Act Aug. 2, 1954, § 112(a), substituted provision for a straight 20-year maturity on debentures for
former provision that the debentures should mature
‘‘three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued, except
that debentures issued with respect to mortgages insured under section 1715e of this title shall mature
twenty years after the date of such debentures’’ in second sentence.
Subsec. (j). Act Aug. 2, 1954, § 113, added subsec. (j).
1951—Subsec. (d). Sept. 1, 1951, inserted in second sentence the provision that debentures issued with respect
to mortgages insured under section 1715e of this title
shall mature twenty years after the date of such debentures.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 105, inserted ‘‘or under
section 1715e of this title’’ in second proviso.
1948—Subsec. (a). Act Aug. 10, 1948, § 101(l)(1), (2),
struck out ‘‘prior to July 1, 1944’’ in first proviso and
inserted second proviso.
Subsec. (f). Act Aug. 10, 1948, § 101(q), inserted ‘‘if the
mortgage was insured under section 1709 of this title
and shall be retained by the Administrator and credited
to the Housing Insurance Fund if the mortgage was insured under section 1713 of this title’’ before the colon
in par. (1).
1943—Subsec. (a). Act Oct. 14, 1943, inserted proviso.
1941—Subsec. (a). Act June 28, 1941, substituted ‘‘July
1, 1944’’ for ‘‘July 1, 1941’’ in last sentence.
1939—Subsec. (a). Act June 3, 1939, § 9, amended last
sentence generally.

Subsec. (g). Act June 3, 1939, § 10, inserted last sentence.
1938—Subsecs. (a) to (f). Act Feb. 3, 1938, amended
provisions generally.
Subsecs. (g), (h). Act Feb. 3, 1938, added subsecs. (g)
and (h).
1937—Subsec. (b). Act Joint Res. Feb. 19, 1937, substituted ‘‘July 1, 1939’’ for ‘‘July 1, 1937’’.
1935—Subsec. (a). Act May 28, 1935, amended last sentence generally.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title VI, § 601(b), Oct. 21, 1998, 112 Stat.
2673, provided that: ‘‘The Secretary shall publish a notice in the Federal Register stating the effective date
of the terms and conditions prescribed by the Secretary
under section 204(a)(1) of the National Housing Act [12
U.S.C. 1710(a)(1)], as amended by subsection (a) of this
section. Subsections (a) and (k) of section 204 of the National Housing Act [12 U.S.C. 1710(a), (k)], as in effect
immediately before such effective date, shall continue
to apply to any mortgage insured under section 203 of
the National Housing Act [12 U.S.C. 1709] before such
effective date, except that the Secretary may, at the
request of the mortgagee, pay insurance benefits as
provided in subparagraphs (A) and (D) of section
204(a)(1) of such Act [12 U.S.C. 1710(a)(1)(A), (D)] to calculate insurance benefits in accordance with section
204(a)(5) of such Act [12 U.S.C. 1710(a)(5)].’’
EFFECTIVE DATE OF 1996 AMENDMENT
Section 407(c) of Pub. L. 104–99, as amended by Pub.
L. 104–134, title I, § 101(e) [title II, § 221(d)], Apr. 26, 1996,
110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L.
104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 104–204,
title II, § 203, Sept. 26, 1996, 110 Stat. 2894; Pub. L. 105–33,
title II, § 2002(1), Aug. 5, 1997, 111 Stat. 257, provided
that: ‘‘Except as provided in subsection (e) [110 Stat. 46,
repealed by Pub. L. 105–33, § 2002(2)], the amendments
made by subsections (a) and (b) [amending this section
and section 1715u of this title] shall apply with respect
to mortgages insured under the National Housing Act
[12 U.S.C. 1701 et seq.] that are executed before, on, or
after October 1, 1997.’’
EFFECTIVE DATE OF 1954 AMENDMENT
Section 112(e) of act Aug. 2, 1954, provided that: ‘‘This
section [amending this section and sections 1713, 1748b,
and 1750c of this title] shall not apply in any case where
the mortgage involved was insured or the commitment
for such insurance was issued prior to the effective date
of the Housing Act of 1954 [Aug. 2, 1954].’’
REGULATIONS
Section 101(e) [title II, § 221(c)(1)] of Pub. L. 104–134
provided that: ‘‘Not later than 30 days after the date of
enactment of this Act [Apr. 26, 1996], the Secretary of
Housing and Urban Development shall issue interim
regulations to implement section 407 of the Balanced
Budget Downpayment Act, I [Pub. L. 104–99, amending
this section and section 1715u of this title and enacting
provisions set out as a note above], and the amendments to the National Housing Act made by that section.’’
Section 407(d) of Pub. L. 104–99, which directed the
Secretary of Housing and Urban Development to issue
interim regulations to implement section 407 of Pub. L.
104–99 and amendments made by that section (amending this section and section 1715u of this title and enacting provisions set out as a note above) not later
than 60 days after Jan. 26, 1996, was repealed by Pub. L.
104–134, title I, § 101(e) [title II, § 221(c)(2)], Apr. 26, 1996,
110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L.
104–140, § 1(a), May 2, 1996, 110 Stat. 1327.
Section 1064(c) of Pub. L. 100–628 provided that: ‘‘In
developing regulations to carry out the amendments
made by this section [amending this section], the Secretary of Housing and Urban Development may delegate to mortgagees the authority to make determina-

§ 1711

TITLE 12—BANKS AND BANKING

tions on behalf of the Secretary, and the Secretary
shall rely on certifications and post audit reviews to
the greatest extent possible.’’
HOMEOWNERSHIP PRESERVATION
Pub. L. 110–289, div. B, title I, § 2125, July 30, 2008, 122
Stat. 2840, provided that: ‘‘The Secretary of Housing
and Urban Development and the Commissioner of the
Federal Housing Administration, in consultation with
industry, the Neighborhood Reinvestment Corporation,
and other entities involved in foreclosure prevention
activities, shall—
‘‘(1) develop and implement a plan to improve the
Federal Housing Administration’s loss mitigation
process; and
‘‘(2) report such plan to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.’’
ASSET CONTROL AREA DEMONSTRATION PROGRAM
AGREEMENTS, CONTRACTS, AND REGULATIONS
Pub. L. 107–206, title I, § 1303, Aug. 2, 2002, 116 Stat.
897, provided that: ‘‘The Secretary of Housing and
Urban Development shall begin to enter into new
agreements and contracts pursuant to the Asset Control Area Demonstration Program as provided in section 602 of Public Law 105–276 [amending this section]
not later than September 15, 2002: Provided, That any
agreement or contract entered into pursuant to such
program shall be consistent with the requirements of
such section 602: Provided further, That the Department
shall develop proposed regulations for this program not
later than September 15, 2002.’’
TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS
Pub. L. 106–554, § 1(a)(7) [title I, § 142], Dec. 21, 2000, 114
Stat. 2763, 2763A–618, provided that: ‘‘In carrying out
the program under section 204(h) of the National Housing Act (12 U.S.C. 1710(h)), upon the request of the chief
executive officer of a county or the government of appropriate jurisdiction and not later than 60 days after
such request is made, the Secretary of Housing and
Urban Development shall designate as a revitalization
area all portions of such county that meet the criteria
for such designation under paragraph (3) of such section.’’
SETTLEMENT COSTS IN THE FINANCING OF FEDERAL
HOUSING ADMINISTRATION AND VETERANS’ ADMINISTRATION ASSISTED HOUSING; STUDY AND RECOMMENDATIONS TO CONGRESS ON REDUCTION AND STANDARDIZATION OF COSTS
Pub. L. 91–351, title VII, § 701, July 24, 1970, 84 Stat.
461, provided that:
‘‘(a) With respect to housing built, rehabilitated, or
sold with assistance provided under the National Housing Act [this chapter] or under chapter 37 of title 38,
United States Code, the Secretary of Housing and
Urban Development and the Administrator of Veterans’
Affairs are respectively authorized and directed to prescribe standards governing the amounts of settlement
costs allowable in connection with the financing of
such housing in any such area. Such standards shall—
‘‘(1) be established after consultation between the
Secretary and the Administrator;
‘‘(2) be consistent in any area for housing assisted
under the National Housing Act and housing assisted
under chapter 37 of title 38, United States Code; and
‘‘(3) be based on the Secretary’s and the Administrator’s estimates of the reasonable charge for necessary services involved in settlements for particular
classes of mortgages and loans.
‘‘(b) The Secretary and the Administrator shall undertake a joint study and make recommendations to
the Congress not later than one year after the date of
enactment of this Act [July 24, 1970] with respect to
legislative and administrative actions which should be
taken to reduce mortgage settlement costs and to
standardize these costs for all geographic areas.’’

Page 604

§ 1711. General Surplus and Participating Reserve Accounts
(a) Establishment; abolishment of General Reinsurance Account
The Secretary shall establish as of July 1, 1954,
in the Mutual Mortgage Insurance Fund a General Surplus Account and a Participating Reserve Account. All of the assets of the General
Reinsurance Account shall be transferred to the
General Surplus Account whereupon the General
Reinsurance Account shall be abolished. There
shall be transferred from the various group accounts to the Participating Reserve Account as
of July 1, 1954, an amount equal to the aggregate
amount which would have been distributed
under the provisions of this section in effect on
June 30, 1954, if all outstanding mortgages in
such group accounts had been paid in full on
said date. All of the remaining balances of said
group accounts shall as of said date be transferred to the General Surplus Account whereupon all of said group accounts shall be abolished.
(b) Credits and charges
The aggregate net income thereafter received
or any net loss thereafter sustained by the Mutual Mortgage Insurance Fund in any semiannual period shall be credited or charged to the
General Surplus Account and/or the Participating Reserve Account in such manner and
amounts as the Secretary may determine to be
in accord with sound actuarial and accounting
practice.
(c) Distribution of funds to terminating mortgagors
Upon termination of the insurance obligation
of the Mutual Mortgage Insurance Fund by payment of any mortgage insured thereunder, the
Secretary is authorized to distribute to the
mortgagor a share of the Participating Reserve
Account in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound actuarial and accounting
practice: Provided, That, in no event, shall any
such distributable share exceed the aggregate
scheduled annual premiums of the mortgagor to
the year of termination of the insurance. The
Secretary shall not distribute any share to an
eligible mortgagor under this subsection beginning on the date which is 6 years after the date
the Secretary first transmitted written notification of eligibility to the last known address of
the mortgagor, unless the mortgagor has applied
in accordance with procedures prescribed by the
Secretary for payment of the share within the 6year period. The Secretary shall transfer any
amounts no longer eligible for distribution
under the previous sentence from the Participating Reserve Account to the General Surplus
Account.
(d) Rights and liabilities
No mortgagor or mortgagee of any mortgage
insured under section 1709 of this title shall have
any vested right in a credit balance in any such
account or be subject to any liability arising out
of the mutuality of the Fund and the determination of the Secretary as to the amount to be
paid by him to any mortgagor shall be final and
conclusive.