12 U.S.C. § 1750c — Mortgage insurance benefits

Page 848 TITLE 12—BANKS AND BANKING § 1750c tender of the initial premium charge or charges so required that the mortgage complies with the provisions of this subchapter, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe; but no mortgage shall be accepted for insurance under this subchapter unless the Secretary finds that the project with respect to which the mortgage is executed is an acceptable risk in view of the needs of national defense. In the event that the principal obligation of any mort- gage accepted for insurance under this sub- chapter is paid in full prior to the maturity date, the Secretary is further authorized in his discretion to require the payment by the mort- gagee of an adjusted premium charge in such amount as the Secretary determines to be equi- table, but not in excess of the aggregate amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage has continued to be insured under this subchapter until such maturity date; and in the event that the principal obligation is paid in full as herein set forth the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current un- earned premium charges theretofore paid. Upon application of the mortgagee with the consent of the mortgagor of a mortgage for which a com- mitment to insure has been issued pursuant to section 1709 of this title covering property on which the construction of the dwellings thereon was begun prior to the enactment of this sub- chapter and the determination of prevailing wages in the locality in accordance with section 1715c of this title, the Secretary is authorized, notwithstanding such beginning of construction, to convert such commitment to a commitment under section 1750g of this title; any charges or fees paid to the Secretary with respect to such insurance under section 1709 of this title shall be credited to charges or fees due the Secretary with respect to such insurance under section 1750g of this title; and the determination of pre- vailing wages in the locality for purposes of sec- tion 1715c of this title may be made by the Sec- retary of Labor at any time prior to the insur- ance under section 1750g of this title: Provided, That such mortgage, or the mortgage covering the same property executed in substitution therefor, is otherwise eligible for insurance under section 1750g of this title. (d) Preference or priority in purchasing or rent- ing properties Notwithstanding any other provisions of this chapter or any other Act, except provisions of law enacted hereafter expressly referring to this subsection (d), the Secretary is further author- ized to prescribe such procedures as are nec- essary to secure to persons engaged or to be en- gaged in national defense activities preference or priority of opportunity to purchase or rent properties, or interests therein, covered by mortgages insured under this subchapter. (e) Conclusiveness of insurance contract as to eligibility Any contract of insurance heretofore or here- after executed by the Secretary under this sub- chapter shall be conclusive evidence of the eligi- bility of the mortgage for insurance, and the va- lidity of any contract of insurance so executed shall be incontestable in the hands of an ap- proved mortgagee from the date of the execution of such contract, except for fraud or misrepre- sentation on the part of such approved mort- gagee. (June 27, 1934, ch. 847, title IX, § 903, as added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 296; amended July 14, 1952, ch. 723, § 13, 66 Stat. 604; June 30, 1953, ch. 170, § 11, 67 Stat. 124; Aug. 2, 1954, ch. 649, title I, § 128(b), 68 Stat. 609; Pub. L. 89–117, title XI, § 1108(x), Aug. 10, 1965, 79 Stat. 507; Pub. L. 90–19, § 1(a)(3), (4), (s), (t), May 25, 1967, 81 Stat. 17, 19.) Editorial Notes REFERENCES IN TEXT The General Insurance Fund, referred to in text, was established by section 1735c of this title. Section 1715h of this title, referred to in subsec. (a), was repealed by Pub. L. 100–242, title IV, § 401(a)(1), Feb. 5, 1988, 101 Stat. 1898. AMENDMENTS 1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (b)(1) to (4), (6), (7), and (c) to (e). Subsec. (a). Pub. L. 90–19, § 1(a)(4), (s), substituted ‘‘Secretary’s’’ and ‘‘Secretary of Housing and Home De- velopment’’ for ‘‘Commissioner’s’’ and ‘‘Housing and Home Finance Administrator’’, respectively. Subsec. (d). Pub. L. 90–19, § 1(t), struck out ‘‘, with the approval of the Housing and Home Finance Admin- istrator,’’ before ‘‘is further authorized’’. 1965—Subsec. (a). Pub. L. 89–117 substituted ‘‘General Insurance Fund’’ for ‘‘National Defense Housing Insur- ance Fund’’. 1954—Subsec. (a). Act Aug. 2, 1954, inserted proviso re- lating to requirement for rental for a period of not less than three years after dwelling is made available for initial occupancy. 1953—Subsec. (a). Act June 30, 1953, inserted proviso commencing ‘‘Provided further, That in the event’’. 1952—Subsec. (c). Act July 14, 1952, inserted last sen- tence. § 1750c. Mortgage insurance benefits (a) Conveyance and assignment by mortgagee after foreclosure; debentures and certificates of claim; cost of foreclosure In any case in which the mortgagee under a mortgage insured under section 1750b of this title shall have foreclosed and taken possession of the mortgaged property, in accordance with regulations of, and within a period to be deter- mined by, the Secretary, or shall, with the con- sent of the Secretary, have otherwise acquired such property from the mortgagor after default, the mortgagee shall be entitled to receive the benefit of the insurance as hereinafter provided, upon (1) the prompt conveyance to the Sec- retary of title to the property which meets the requirements of rules and regulations of the Secretary in force at the time the mortgage was insured, and which is evidenced in the manner prescribed by such rules and regulations; and (2) the assignment to him of all claims of the mort- gagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Secretary. Page 849 TITLE 12—BANKS AND BANKING § 1750c 1 See References in Text note below. Upon such conveyance and assignment the obli- gation of the mortgagee to pay the premium charges for insurance shall cease and the Sec- retary shall, subject to the cash adjustment hereinafter provided, issue to the mortgagee de- bentures having a total face value equal to the value of the mortgage and a certificate of claim, as hereinafter provided. For the purposes of this subsection, the value of the mortgage shall be determined, in accordance with rules and regu- lations prescribed by the Secretary, by adding to the amount of the original principal obliga- tion of the mortgage which was unpaid on the date of the institution of foreclosure pro- ceedings, or on the date of the acquisition of the property after default other than by foreclosure, the amount of all payments which have been made by the mortgagee for taxes, ground rents, and water rates, which are liens prior to the mortgage, special assessments which are noted on the application for insurance or which be- come liens after the insurance of the mortgage, insurance of the mortgaged property, and any mortgage insurance premiums and by deducting from such total amount any amount received on account of the mortgage after either of such dates and any amount received as rent or other income from the property, less reasonable ex- penses incurred in handling the property, after either of such dates: Provided, That with respect to mortgages which are foreclosed before there shall have been paid on account of the principal obligation of the mortgage a sum equal to 10 per centum of the appraised value of the property as of the date the mortgage was accepted for insur- ance, there may be included in the debentures issued by the Secretary, on account of the cost of foreclosure (or of acquiring the property by other means) actually paid by the mortgagee and approved by the Secretary an amount— (1) not in excess of 2 per centum of the un- paid principal of the mortgage as of the date of the institution of foreclosure proceedings and not in excess of $75; or (2) not in excess of two-thirds of such cost, whichever is the greater: Provided further, That with respect to any debentures issued on or after September 2, 1964, the Secretary may, with the consent of the mortgagee (in lieu of issuing a certificate of claim as provided in subsection (e)), include in debentures, in addi- tion to amounts otherwise allowed for such costs, an amount not to exceed one-third of the total foreclosure, acquisition, and convey- ance costs actually paid by the mortgagee and approved by the Secretary, but in no event may the total allowance for such costs exceed the amount actually paid by the mortgagee: And provided further, That with respect to mortgages to which the provisions of sections 302 and 306 of the Soldiers’ and Sailors’ Civil Relief Act of 1940,1 as now or hereafter amend- ed, apply and which are insured under section 1750b of this title, and subject to such regula- tions and conditions as the Secretary may pre- scribe, there shall be included in the deben- tures an amount which the Secretary finds to be sufficient to compensate the mortgagee for any loss which it may have sustained on ac- count of interest on debentures and the pay- ment of insurance premiums by reason of its having postponed the institution of fore- closure proceedings or the acquisition of the property by other means during any part or all of the period of such military service and three months thereafter. (b) Consent to release of mortgagee or property The Secretary may at any time, under such terms and conditions as he may prescribe, con- sent to the release of the mortgagor from his li- ability under the mortgage or the credit instru- ment secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage. (c) Debentures; form and denomination Debentures issued under this subchapter shall be in such form and denominations in multiples of $50, shall be subject to such terms and condi- tions, and shall include such provisions for re- demption, if any, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury, and may be in coupon or reg- istered form. Any difference between the amount of debentures to which the mortgagee is entitled under this section or section 1750g of this title and the aggregate face value of the de- bentures issued, not to exceed $350, shall be ad- justed by the payment of cash by the Secretary to the mortgagee from the General Insurance Fund. (d) Debentures; execution; negotiability; terms; tax exemptions The debentures issued under this section to any mortgagee shall be executed in the name of the General Insurance Fund as obligor, shall be signed by the Secretary by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mort- gagee after default, except 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 determined by the Sec- retary, with the approval of the Secretary of the Treasury, at the time the mortgage was accept- ed for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year. Such debentures shall mature twenty years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inherit- ance, or gift taxes) now or hereafter imposed by any Territory, dependency, or possession of the United States, or by the District of Columbia, or by any State, county, municipality, or local tax- ing authority, and shall be paid out of the Gen- eral Insurance Fund, which shall be primarily liable therefor, and they shall be fully and un- conditionally guaranteed as to principal and in- terest by the United States, and such guaranty shall be expressed on the face of the debentures. In the event that the General Insurance Fund fails to pay upon demand, when due, the prin- Page 850 TITLE 12—BANKS AND BANKING § 1750c cipal of or interest on any debentures issued under this subchapter, 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 shall succeed to all the rights of the holders of such debentures. (e) Certificate of claim; division of excess pro- ceeds The certificate of claim issued by the Sec- retary to any mortgagee under this section shall be for an amount determined in accordance with, and shall contain provisions and shall be paid in accordance with, the provisions of sec- tion 1710(e) and section 1710(f) of this title. (f) 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 Sec- retary shall have power to deal with, complete, rent, renovate, modernize, insure, make con- tracts or establish suitable agencies for the management of, 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, notwith- standing any other provision of law, the Sec- retary shall also have power to pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mort- gagees to the Secretary as provided in this sub- chapter: Provided, That section 6101 of title 41 shall not be construed to apply to any purchase or contract for services or supplies on account of such property if the amount thereof does not ex- ceed $1,000. The power to convey and to execute in the name of the Secretary deeds of convey- ances, deeds of release, assignments, and satis- factions of mortgages, and any other written in- strument relating to real property or any inter- est therein heretofore or hereafter acquired by the Secretary pursuant to the provisions of this chapter, may be exercised by an officer ap- pointed by him, without the execution of any express delegation of power or power of attor- ney: Provided, That nothing in this subsection shall be construed to prevent the Secretary from delegating such power by order or by power of attorney in his discretion, to any officer, agent, or employee he may appoint. (g) Mortgagor’s or mortgagee’s interest in prop- erty or claim conveyed No mortgagee or mortgagor shall have, and no certification of claim shall be construed to give to any mortgagee or mortgagor, any right or in- terest in any property conveyed to the Sec- retary 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 dis- posal of any such property or the collection of any such claim. (June 27, 1934, ch. 847, title IX, § 904, as added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 298; amended Aug. 2, 1954, ch. 649, title I, § 112(d), 68 Stat. 593; Pub. L. 88–560, title I, § 105(e), (f), Sept. 2, 1964, 78 Stat. 773, 774; Pub. L. 89–117, title XI, § 1108(y), Aug. 10, 1965, 79 Stat. 507; Pub. L. 90–19, § 1(a)(3), (d), May 25, 1967, 81 Stat. 17, 18; Pub. L. 98–479, title II, § 204(a)(23), Oct. 17, 1984, 98 Stat. 2233.) Editorial Notes REFERENCES IN TEXT The General Insurance Fund, referred to in text, was established by section 1735c of this title. Sections 302 and 306 of the Soldiers’ and Sailors’ Civil Relief Act of 1940, referred to in subsec. (a)(2), are sec- tions 302 and 306, respectively, of act Oct. 17, 1940, ch. 888, 54 Stat. 1178. That Act was amended generally and renamed the ‘‘Servicemembers Civil Relief Act’’ by Pub. L. 108–189, § 1, Dec. 19, 2003, 117 Stat. 2835. As so amended, provisions of the Servicemembers Civil Relief Act that are similar to those contained in former sec- tions 302 and 306 of act Oct. 17, 1940, are now contained in sections 3953 and 3959 of Title 50. CODIFICATION In subsec. (f), ‘‘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 1984—Subsec. (d). Pub. L. 98–479 substituted ‘‘author- ized’’ for ‘‘auhorized’’ in last sentence. 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing in subsecs. (a), (a)(2), and (b) to (g). Subsec. (f). Pub. L. 90–19, § 1(d), substituted ‘‘an offi- cer’’ for ‘‘the Commissioner or by any Assistant Com- missioner’’. 1965—Subsecs. (c), (d). Pub. L. 89–117, § 1108(y)(1), sub- stituted ‘‘General Insurance Fund’’ for ‘‘National De- fense Housing Insurance Fund’’. Subsec. (e). Pub. L. 89–117, § 1108(y)(2), removed limi- tation which had rendered applicable to certificates of claim only those provisions of sections 1710(e) and 1710(f) of this title which were applicable to mortgages insured under section 1713 of this title and struck out provision that reference in section 1710(f) of this title to the ‘‘Housing Insurance Fund’’ shall be deemed for the purpose of this section to be reference to the ‘‘Na- tional Defense Housing Insurance Fund’’. 1964—Subsec. (a). Pub. L. 88–560, § 105(e)(1), (f), in- serted ‘‘Provided further, That with respect to any de- bentures issued on or after September 2, 1964, the Com- missioner may, with the consent of the mortgagee (in lieu of issuing a certificate of claim as provided in sub- section (e)), include in debentures, in addition to amounts otherwise allowed for such costs, an amount not to exceed one-third of the total foreclosure, acqui- sition, and conveyance costs actually paid by the mort- gagee and approved by the Commissioner, but in no event may the total allowance for such costs exceed the amount actually paid by the mortgagee:’’ and struck out ‘‘paid after either of such dates’’ after ‘‘mortgage insurance premiums’’ in third sentence, respectively. Subsec. (c). Pub. L. 88–560, § 105(e)(2), increased limita- tion on difference between amount of debentures to which the mortgagee is entitled under this section or section 1750g of this title and aggregate face value of debentures issued from $50 to $350. Subsec. (d). Pub. L. 88–560, § 105(e)(3), substituted in second sentence ‘‘default, except that debentures issued pursuant to claims for insurance filed on or after Sep- tember 2, 1964 shall be dated as of the date of default or as of such later date as the Commissioner, in his dis- cretion, may establish by regulation. The debentures’’ for ‘‘default, and’’. 1954—Subsec. (d). Act Aug. 2, 1954, in third sentence, substituted a twenty-year period for the ten-year pe- riod, with respect to the maturity of debentures. Page 851 TITLE 12—BANKS AND BANKING § 1750g Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1954 AMENDMENT Amendment by act Aug. 2, 1954, as not applicable in any case where the mortgage involved was insured or the commitment for such insurance was issued prior to Aug. 2, 1954, see section 112(e) of that act, set out as a note under section 1710 of this title. § 1750d. Repealed. Pub. L. 89–117, title XI, § 1108(aa), Aug. 10, 1965, 79 Stat. 507 Section, act June 27, 1934, ch. 847, title IX, § 905, as added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301, provided for management of National Defense Housing Insurance Fund, issue and cancellation of debentures, and receipt and payment of charges and fees. § 1750e. Taxation Nothing in this subchapter shall be construed to exempt any real property acquired and held by the Secretary under this subchapter from taxation by any State or political subdivision thereof, to the same extent, according to its value, as other real property is taxed. (June 27, 1934, ch. 847, title IX, § 906, as added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301; amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.) Editorial Notes AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’. § 1750f. Rules and regulations The Secretary is authorized and directed to make such rules and regulations as may be nec- essary to carry out the provisions of this sub- chapter. (June 27, 1934, ch. 847, title IX, § 907, as added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301; amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.) Editorial Notes AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’. § 1750g. Insurance of additional mortgages (a) Authorization In addition to mortgages insured under sec- tion 1750b of this title, the Secretary is author- ized to insure mortgages as defined in section 1750 of this title (including advances on such mortgages during construction) which are eligi- ble for insurance as hereinafter provided. (b) Eligibility requirements; release of part of property To be eligible for insurance under this section a mortgage shall meet the following conditions: (1) The mortgaged property shall be held by a mortgagor approved by the Secretary. The Secretary may, in his discretion, require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The Sec- retary may make such contracts with, and ac- quire for not to exceed $100 stock or interest in any such mortgagor, as the Secretary may deem necessary to render effective such re- striction or regulation. Such stock or interest shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance. (2) The mortgage shall involve a principal obligation in an amount— (A) not to exceed $5,000,000; and (B) not to exceed 90 per centum of the amount which the Secretary estimates will be the value of the property or project when the proposed improvements are completed: Provided, That such mortgage shall not in any event exceed the amount which the Sec- retary estimates will be the cost of the com- pleted physical improvements on the prop- erty or project exclusive of off-site public utilities and streets and organization and legal expenses; and (C) not to exceed $8,100 per family unit (or $7,200 per family unit if the number of rooms in such property or project does not equal or exceed four per family unit) for such part of such property or project as may be attrib- utable to dwelling use: Provided, That the Secretary may by regulation increase such dollar amount limitations by not exceeding $900 in any geographical area where he finds that cost levels so require. (3) The mortgagor shall enter into the agree- ment required by section 1715r of this title. The mortgage shall provide for complete amor- tization by periodic payments within such term as the Secretary shall prescribe, and shall bear interest (exclusive of premium charges for insur- ance) at not to exceed 41⁄2 per centum per annum on the amount of the principal obligation out- standing at any time. The Secretary may con- sent to the release of a part or parts of the mort- gaged property from the lien of the mortgage upon such terms and conditions as he may pre- scribe and the mortgage may provide for such release. (c) Default; debentures; cash adjustment; certifi- cate of claim The mortgagee shall be entitled to receive de- bentures in connection with mortgages insured under this section in the amount and under the conditions specified in subsection (g) of section 1713 of this title, and the references in said sub- section (g) to the cash adjustment provided for in subsection (j) of section 1713 and to the cer- tificate of claim provided for in subsection (h) of section 1713 shall be deemed to refer respectively to the cash adjustment provided for in sub- section (c) of section 1750c of this title and to the certificate of claim provided for in sub- section (d) of this section. (d) Certificate of claim; contents and payment The certificate of claim issued by the Sec- retary to any mortgagee under this section shall be for an amount determined in accordance with, and shall contain provisions and shall be paid in accordance with, the provisions of sec- tion 1713(h) of this title.