12 U.S.C. § 1735d — Mortgage insurance for condominiums

**(a) Purpose** The purpose of this section is to provide an additional means of increasing the supply of privately owned dwelling units where, under the laws of the State in which the property is located, real property title and ownership are established with respect to a one-family unit which is part of a multifamily project. **(b) Definitions** The terms “mortgage”, “mortgagee”, “mortgagor”, “maturity date”, and “State” shall have the meanings respectively set forth in [section 1707 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1707&num=0&edition=prelim), except that the term “mortgage” for the purposes of subsection (c) may include a first mortgage given to secure the unpaid purchase price of a fee interest in, or a long-term leasehold interest in, a one-family unit in a multifamily project, including a project in which the dwelling units are attached, semi-attached, or detached, and an undivided interest in the common areas and facilities which serve the project where the mortgage is determined by the Secretary to be eligible for insurance under this section. The term “common areas and facilities” as used in this section shall be deemed to include the land and such commercial, community, and other facilities as are approved by the Secretary. **(c) Authorization; eligibility for insurance; conditions; limits** The Secretary is authorized, in his discretion and under such terms and conditions as he may prescribe (including the minimum number of family units in the project which shall be offered for sale and provisions for the protection of the consumer and the public interest), to insure any mortgage covering a one-family unit in a multifamily project and an undivided interest in the common areas and facilities which serve the project, if (1) the mortgage meets the requirements of this subsection and of [section 1709(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1709/b&num=0&edition=prelim), except as that section is modified by this subsection, (2) at least 80 percent of the units in the project covered by mortgages insured under this subchapter are occupied by the mortgagors or comortgagors, and (3) the project has a blanket mortgage insured by the Secretary under subsection (d). Any project proposed to be constructed or rehabilitated after June 30, 1961, with the assistance of mortgage insurance under this chapter, where the sale of family units is to be assisted with mortgage insurance under this subsection, shall be subject to such requirements as the Secretary may prescribe. To be eligible for insurance pursuant to this subsection, a mortgage shall (A) involve a principal obligation in an amount not to exceed the maximum principal obligation of a mortgage which may be insured in the area pursuant to [section 1709(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1709/b/2&num=0&edition=prelim) or pursuant to [section 1709(h) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1709/h&num=0&edition=prelim) under the conditions described in [section 1709(h) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1709/h&num=0&edition=prelim), and (B) have a maturity satisfactory to the Secretary, but not to exceed, in any event, thirty-five years from the date of the beginning of amortization of the mortgage. The mortgage shall contain such provisions as the Secretary determines to be necessary for the maintenance of common areas and facilities and the multifamily project. The mortgagor shall have exclusive right to the use of the one-family unit covered by the mortgage and, together with the owners of other units in the multifamily project, shall have the right to the use of the common areas and facilities serving the project and the obligation of maintaining all such common areas and facilities. The Secretary may require that the rights and obligations of the mortgagor and the owners of other dwelling units in the project shall be subject to such controls as he determines to be necessary and feasible to promote and protect individual owners, the multifamily project, and its occupants. For the purposes of this subsection, the Secretary is authorized in his discretion and under such terms and conditions as he may prescribe to permit one-family units and interests in common areas and facilities in multifamily projects covered by mortgages insured under any section of this chapter (other than section 1715e(a)(1) and (2) of this title) to be released from the liens of those mortgages. **(d) Blanket mortgages of multifamily projects; plan of family unit ownership; regulations; stock purchase and redemption** In addition to individual mortgages insured under subsection (c), the Secretary is authorized, in his discretion and under such terms and conditions as he may prescribe, to insure blanket mortgages (including advances on such mortgages during construction) which cover multifamily projects to be constructed or rehabilitated in cases where the mortgage is held by a mortgagor, approved by the Secretary, which— (1) has certified to the Secretary, as a condition of obtaining the insurance of a blanket mortgage under this subsection, that upon completion of the multifamily project covered by such mortgage it intends to commit the ownership of the multifamily project to a plan of family unit ownership under which each family unit would be eligible for individual mortgage insurance under subsection (c) and will faithfully and diligently make and carry out all reasonable efforts to establish such plan of family unit ownership and to sell such family units to purchasers approved by the Secretary; and (2) may, in the Secretary’s discretion, be regulated or restricted as to rents, charges, capital structure, rate of return, and methods of operation until the termination of all obligations of the Secretary under the insurance and during such further period of time as the Secretary shall be the owner, holder or reinsurer of the mortgage. The Secretary may make such contracts with and acquire for not to exceed $100 such stock or interest in such mortgagor as he may deem necessary to render effective any such regulation or restriction of such mortgagor. The stock or interest acquired by the Secretary shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par at any time upon the request of the Secretary after the termination of all obligations of the Secretary under the insurance. **(e) Eligibility for insurance of blanket mortgages of multifamily projects** To be eligible for insurance, a blanket mortgage on any multifamily project of a mortgagor of the character described in subsection (d) shall involve a principal obligation in an amount— (1) Repealed. Pub. L. 93–383, title III, § 304(h), Aug. 22, 1974, 88 Stat. 678; (2) not to exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the project when the proposed physical improvements are completed; (3) (A) not to exceed, for such part of the project as may be attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $42,048 per family unit without a bedroom, $48,481 per family unit with one bedroom, $58,469 per family unit with two bedrooms, $74,840 per family unit with three bedrooms, and $83,375 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed $44,250 per family unit without a bedroom, $50,724 per family unit with one bedroom, $61,680 per family unit with two bedrooms, $79,793 per family unit with three bedrooms, and $87,588 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator-type structures of sound standards of construction and design; (B) the Secretary may, by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1712a&num=0&edition=prelim)) by not to exceed 170 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the Secretary determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 11 See References in Text note below. of this title (as such section existed immediately before November 30, 1983) is involved; and (4) not to exceed an amount equal to the sum of the unit mortgage amounts determined under the provisions of subsection (c) assuming the mortgagor to be the owner and occupant of each family unit. **(f) Amortization of blanket mortgages of multifamily projects; interest; releases; extent of project** Any blanket mortgage insured under subsection (d) shall provide for complete amortization by periodic payments within such terms as the Secretary may prescribe but not to exceed 40 years from the beginning of amortization of the mortgage, and shall bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee. The Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the blanket mortgage upon such terms and conditions as he may prescribe and the blanket mortgage may provide for such release. The project covered by the blanket mortgage may include four or more family units and such commercial and community facilities as the Secretary deems adequate to serve the occupants. **(g) Entitlement to insurance benefits as provided in [section 1710(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1710/a&num=0&edition=prelim)** Any mortgagee under a mortgage insured under subsection (c) of this section is entitled to receive the benefits of the insurance as provided in [section 1710(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1710/a&num=0&edition=prelim) with respect to mortgages insured under [section 1709 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1709&num=0&edition=prelim), and the provisions of subsections (b), (c), (d), (e), (f), (g), (h),1 (j), and (k) 1 of [section 1710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1710&num=0&edition=prelim) shall be applicable to the mortgages insured under subsection (c) of this section. **(h) Applicability of other provisions** The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l), and (n) of [section 1713 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1713&num=0&edition=prelim) shall be applicable to mortgages insured under subsection (d) of this section. **(i) Applicability of other provisions** The provisions of sections 1715p and 1715u of this title shall be applicable to the mortgages insured under subsection (c) of this section. **(j) Increase in maximum insurance amounts for costs incurred from solar energy systems and energy conservation measures** The Secretary may further increase the dollar amount limitations which would otherwise apply under subsection (e) by not to exceed 20 per centum if such increase is necessary to account for the increased cost of a project due to the installation therein of a solar energy system (as defined in subparagraph (3) of the last paragraph of [section 1703(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1703/a&num=0&edition=prelim)) or residential energy conservation measures (as defined in section 8211(11)(A) through (G) and (I) of title 42) 1 in cases where the Secretary determines that such measures are in addition to those required under the minimum property standards and will be cost-effective over the life of the measure. **(k) Rental housing conversion** With respect to a unit in any project which was converted from rental housing, no insurance may be provided under this section unless (1) the conversion occurred more than one year prior to the application for insurance, (2) the mortgagor or comortgagor was a tenant of that rental housing, (3) the conversion of the property is sponsored by a bona fide tenants organization representing a majority of the households in the project, or (4) before April 20, 1984 (A) application was made to the Secretary for a commitment to insure a mortgage covering any unit in the project, (B) in the case of direct endorsement, the mortgagee received the case number assigned by the Secretary for any unit in the project, or (C) application was made for approval of the project for guarantee, insurance, or direct loan under chapter 37 of title 38.