12 U.S.C. § 1708 — Federal Housing Administration oper-

Page 533 TITLE 12—BANKS AND BANKING § 1708 serted ‘‘, or (C) a first mortgage given to secure the un- paid purchase price of a fee interest in, or long-term leasehold interest in, real estate consisting of a one- family unit in a multifamily project, including a project in which the dwelling units are attached, or are manufactured housing units, semi-detached, or de- tached, and an undivided interest in the common areas and facilities which serve the project’’ before semi- colon. Subsec. (d). Pub. L. 110–289, § 2120(c), substituted ‘‘the Commonwealth of the Northern Mariana Islands’’ for ‘‘the Trust Territory of the Pacific Islands’’. Subsec. (g). Pub. L. 110–289, § 2117(c), added subsec. (g). 1996—Subsecs. (e), (f). Pub. L. 104–204 added subsecs. (e) and (f). 1983—Subsec. (d). Pub. L. 98–181 inserted ‘‘American Samoa,’’ after ‘‘Pacific Islands,’’. 1980—Subsec. (a). Pub. L. 96–399 substituted ‘‘ten years to run beyond the maturity date of the mort- gage’’ for ‘‘fifty years to run from the date the mort- gage was executed’’. 1969—Subsec. (d). Pub. L. 91–152 inserted ‘‘the Trust Territory of the Pacific Islands’’ after ‘‘Guam’’. 1967—Subsec. (b). Pub. L. 90–19 substituted ‘‘Sec- retary’’ for ‘‘Commissioner’’. 1960—Subsec. (d). Pub. L. 86–624 struck out ‘‘Hawaii,’’ before ‘‘Puerto Rico’’. 1959—Subsec. (d). Pub. L. 86–70 struck out ‘‘Alaska,’’ before ‘‘Hawaii’’. 1952—Subsec. (d). Act July 14, 1952, inserted ‘‘Guam,’’ after ‘‘District of Columbia’’. 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’. 1941—Subsec. (a). Act Mar. 28, 1941, § 4(a)(1), struck out ‘‘district, or Territory’’. Subsec. (d). Act Mar. 28, 1941, § 4(a)(2), added subsec. (d). 1938—Subsec. (a)(2). Act Feb. 3, 1938, struck out ‘‘upon which there is located a dwelling for not more than four families which is used in whole or in part for resi- dential purposes, irrespective of whether such dwelling has a party wall or is otherwise physically connected with another dwelling’’ after ‘‘executed’’. Subsec. (c). Act Feb. 3, 1938, added subsec. (c). Statutory Notes and Related Subsidiaries IMPROVEMENT OF FINANCING FOR MULTIFAMILY HOUSING Pub. L. 102–550, title V, subtitle C, Oct. 28, 1992, 106 Stat. 3794, which related to improvement of financing for multifamily housing and was formerly set out as a note under this section, was transferred or omitted as follows: Section 541 of Pub. L. 102–550 was transferred and is set out as a note under section 1701 of this title; Section 542 of Pub. L. 102–550 was transferred to sec- tion 1715z–22 of this title; Section 543 of Pub. L. 102–550, as amended by Pub. L. 111–203, title III, § 371, July 21, 2010, 124 Stat. 1565, was omitted from the Code; Section 544 of Pub. L. 102–550 was transferred to sec- tion 1715z–22a of this title. § 1708. Federal Housing Administration oper- ations (a) Mutual Mortgage Insurance Fund (1) Establishment Subject to the provisions of the Federal Credit Reform Act of 1990 [2 U.S.C. 661 et seq.], there is hereby created a Mutual Mortgage In- surance Fund (in this subchapter referred to as the ‘‘Fund’’), which shall be used by the Sec- retary to carry out the provisions of this sub- chapter with respect to mortgages insured under section 1709 of this title. The Secretary may enter into commitments to guarantee, and may guarantee, such insured mortgages. (2) Limit on loan guarantees The authority of the Secretary to enter into commitments to guarantee such insured mort- gages shall be effective for any fiscal year only to the extent that the aggregate original prin- cipal loan amount under such mortgages, any part of which is guaranteed, does not exceed the amount specified in appropriations Acts for such fiscal year. (3) Fiduciary responsibility The Secretary has a responsibility to ensure that the Mutual Mortgage Insurance Fund re- mains financially sound. (4) Annual independent actuarial study The Secretary shall provide for an inde- pendent actuarial study of the Fund to be con- ducted annually, which shall analyze the fi- nancial position of the Fund. The Secretary shall submit a report annually to the Congress describing the results of such study and as- sessing the financial status of the Fund. The report shall recommend adjustments to under- writing standards, program participation, or premiums, if necessary, to ensure that the Fund remains financially sound. The report shall also include an evaluation of the quality control procedures and accuracy of informa- tion utilized in the process of underwriting loans guaranteed by the Fund. Such evalua- tion shall include a review of the risk charac- teristics of loans based not only on borrower information and performance, but on risks as- sociated with loans originated or funded by various entities or financial institutions. (5) Quarterly reports During each fiscal year, the Secretary shall submit a report to the Congress for each cal- endar quarter, which shall specify for mort- gages that are obligations of the Fund— (A) the cumulative volume of loan guar- antee commitments that have been made during such fiscal year through the end of the quarter for which the report is sub- mitted; (B) the types of loans insured, categorized by risk; (C) any significant changes between actual and projected claim and prepayment activ- ity; (D) projected versus actual loss rates; and (E) updated projections of the annual sub- sidy rates to ensure that increases in risk to the Fund are identified and mitigated by ad- justments to underwriting standards, pro- gram participation, or premiums, and the fi- nancial soundness of the Fund is main- tained. The first quarterly report under this para- graph shall be submitted on the last day of the first quarter of fiscal year 2008, or on the last day of the first full calendar quarter following July 30, 2008, whichever is later. (6) Adjustment of premiums If, pursuant to the independent actuarial study of the Fund required under paragraph (4), the Secretary determines that the Fund is not meeting the operational goals established under paragraph (7) or there is a substantial Page 534 TITLE 12—BANKS AND BANKING § 1708 1 See References in Text note below. probability that the Fund will not maintain its established target subsidy rate, the Sec- retary may either make programmatic adjust- ments under this subchapter as necessary to reduce the risk to the Fund, or make appro- priate premium adjustments. (7) Operational goals The operational goals for the Fund are— (A) to minimize the default risk to the Fund and to homeowners by among other ac- tions instituting fraud prevention quality control screening not later than 18 months after July 30, 2008; and (B) to meet the housing needs of the bor- rowers that the single family mortgage in- surance program under this subchapter is de- signed to serve. (b) Advisory Board There is created a Federal Housing Adminis- tration Advisory Board (‘‘Board’’) that shall re- view operation of the Federal Housing Adminis- tration, including the activities of the Mort- gagee Review Board, and shall provide advice to the Federal Housing Commissioner with respect to the formulation of general policies of the Federal Housing Administration and such other matters as the Federal Housing Commissioner may deem appropriate. The Advisory Board shall, in all other respects, be subject to the pro- visions of chapter 10 of title 5. (1) The Advisory Board shall be composed of 15 members to be appointed from among indi- viduals who have substantial expertise and broad experience in housing and mortgage lending of whom— (A) 9 shall be appointed by the Secretary; (B) 3 shall be appointed by the Chairman and Ranking Minority Member of the Sub- committee on Housing and Urban Affairs of the Committee on Banking, Housing, and Urban Affairs of the Senate; and (C) 3 shall be appointed by the Chairman and Ranking Minority Member of the Sub- committee on Housing and Community De- velopment of the Committee on Banking, Fi- nance and Urban Affairs of the House of Rep- resentatives. (2) Membership on the Advisory Board shall include— (A) not less than 4 persons with distin- guished private sector careers in housing fi- nance, lending, management, development or insurance; (B) not less than 4 persons with out- standing reputations as licensed actuaries, experts in actuarial science, or economics related to housing; (C) not less than 4 persons with back- grounds of leadership in representing the in- terests of housing consumers; (D) not less than 1 person with significant experience and a distinguished reputation for work in the enforcement, advocacy, or development of fair housing or civil rights legislation; and (E) not less than 1 person with a back- ground of leadership representing rural housing interests. (3) Members of the Advisory Board shall be selected to ensure, to the greatest extent prac- ticable, geographical representation or every region of the country. (4) Not more than 8 members of the Advisory Board may be from any one political party. (5) Membership of the Advisory Board shall not include any person who, during the pre- vious 24-month period, was required to register with the Secretary under section 3537b(c) 1 of title 42 or employed a person for purposes that required such person to so register. (6) Of the members of the Advisory Board first appointed, 5 shall have terms of l year, and 5 shall have terms of 2 years. Their succes- sors and all other appointees shall have terms of 3 years. (7) The Advisory Board is empowered to con- fer with, request information of, and make recommendations to the Federal Housing Commissioner. The Commissioner shall promptly provide the Advisory Board with such information as the Board determines to be necessary to carry out its review of the ac- tivities and policies of the Federal Housing Administration. (8) The Board shall, not later than December 31 of each year, submit to the Secretary and the Congress a report of its assessment of the activities of the Federal Housing Administra- tion, including the soundness of underwriting procedures, the adequacy of information sys- tems, the appropriateness of staffing patterns, the effectiveness of the Mortgagee Review Board, and other matters related to the Fed- eral Housing Administration’s ability to serve the nation’s homebuyers and renters. Such re- port shall contain the Board’s recommenda- tions for improvement and include any minor- ity views. (9) The Board shall meet in Washington, D.C., not less than twice annually, or more frequently if requested by the Federal Housing Commissioner or a majority of the members. The Board shall elect a chair, vice-chair and secretary and adopt methods of procedure. The Board may establish committees and sub- committees as needed. (10) Subject to the provisions of section 1006 of title 5, all members of the Board may be compensated and shall be entitled to reim- bursement from the Department for traveling expenses incurred in attendance at meetings of the Board. (11) The Board shall terminate on January 1, 1995. (c) Mortgagee Review Board (1) Establishment There is established within the Federal Housing Administration the Mortgagee Re- view Board (‘‘Board’’). The Board is empow- ered to initiate the issuance of a letter of rep- rimand, the probation, suspension or with- drawal of any mortgagee found to be engaging in activities in violation of Federal Housing Administration requirements or the non- discrimination requirements of the Equal Credit Opportunity Act [15 U.S.C. 1691 et seq.], the Fair Housing Act [42 U.S.C. 3601 et seq.], or Executive Order 11063. Page 535 TITLE 12—BANKS AND BANKING § 1708 2 So in original. Probably should be ‘‘subparagraph’’. (2) Composition The Board shall consist of— (A) the Assistant Secretary of Housing/ Federal Housing Commissioner; (B) the General Counsel of the Depart- ment; (C) the President of the Government Na- tional Mortgage Association; (D) the Assistant Secretary for Adminis- tration; (E) the Assistant Secretary for Fair Hous- ing Enforcement (in cases involving viola- tions of nondiscrimination requirements); and (F) the Chief Financial Officer of the De- partment or their designees. (3) Actions authorized When any report, audit, investigation, or other information before the Board discloses that a basis for an administrative action against a mortgagee exists, the Board shall take one of the following administrative ac- tions: (A) Letter of reprimand The Board may issue a letter of reprimand only once to a mortgagee without taking ac- tion under subparagraphs 2 (B), (C), or (D) of this section. A letter of reprimand shall ex- plain the violation and describe actions the mortgagee should take to correct the viola- tion. (B) Probation The Board may place a mortgagee on pro- bation for a specified period of time not to exceed 6 months for the purpose of evalu- ating the mortgagee’s compliance with Fed- eral Housing Administration requirements, the Equal Credit Opportunity Act [15 U.S.C. 1691 et seq.], the Fair Housing Act [42 U.S.C. 3601 et seq.], Executive Order 11063, or orders of the Board. During the probation period, the Board may impose reasonable additional requirements on a mortgagee including su- pervision of the mortgagee’s activities by the Federal Housing Administration, peri- odic reporting to the Federal Housing Com- missioner, or submission to Federal Housing Administration audits of internal financial statements, audits by an independent cer- tified public accountant or other audits. (C) Suspension The Board may issue an order temporarily suspending a mortgagee’s approval for doing business with the Federal Housing Adminis- tration if (i) there exists adequate evidence of a violation or violations and (ii) continu- ation of the mortgagee’s approval, pending or at the completion of any audit, investiga- tion, or other review, or such administrative or other legal proceedings as may ensue, would not be in the public interest or in the best interests of the Department. Notwith- standing paragraph (4)(A), a suspension shall be effective upon issuance by the Board if the Board determines that there exists ade- quate evidence that immediate action is re- quired to protect the financial interests of the Department or the public. A suspension shall last for not less than 6 months, and for not longer than 1 year. The Board may ex- tend the suspension for an additional 6 months if it determines the extension is in the public interest. If the Board and the mortgagee agree, these time limits may be extended. During the period of suspension, the Federal Housing Administration shall not commit to insure any mortgage origi- nated by the suspended mortgagee. (D) Withdrawal The Board may issue an order withdrawing a mortgagee if the Board has made a deter- mination of a serious violation or repeated violations by the mortgagee. The Board shall determine the terms of such with- drawal, but the term shall be not less than 1 year. Where the Board has determined that the violation is egregious or willful, the withdrawal shall be permanent. (E) Settlements The Board may at any time enter into a settlement agreement with a mortgagee to resolve any outstanding grounds for an ac- tion. Agreements may include provisions such as— (i) cessation of any violation; (ii) correction or mitigation of the ef- fects of any violation; (iii) repayment of any sums of money wrongfully or incorrectly paid to the mortgagee by a mortgagor, by a seller or by the Federal Housing Administration; (iv) actions to collect sums of money wrongfully or incorrectly paid by the mortgagee to a third party; (v) indemnification of the Federal Hous- ing Administration for mortgage insur- ance claims on mortgages originated in violation of Federal Housing Administra- tion requirements; (vi) modification of the length of the penalty imposed; or (vii) implementation of other corrective measures acceptable to the Secretary. Material failure to comply with the provi- sions of a settlement agreement shall be suf- ficient cause for suspension or withdrawal. (4) Notice and hearing (A) The Board shall issue a written notice to the mortgagee at least 30 days prior to taking any action against the mortgagee under sub- paragraph (B), (C), or (D) of paragraph (3). The notice shall state the specific violations which have been alleged, and shall direct the mort- gagee to reply in writing to the Board within 30 days. If the mortgagee fails to reply during such period, the Board may make a determina- tion without considering any comments of the mortgagee. (B) If the Board takes action against a mort- gagee under subparagraph (B), (C), or (D) of paragraph (3), the Board shall promptly notify the mortgagee in writing of the nature, dura- tion, and specific reasons for the action. If, within 30 days of receiving the notice, the mortgagee requests a hearing, the Board shall Page 536 TITLE 12—BANKS AND BANKING § 1708 hold a hearing on the record regarding the vio- lations within 30 days of receiving the request. If a mortgagee fails to request a hearing with- in such 30-day period, the right of the mort- gagee to a hearing shall be considered waived. (C) In any case in which the notification of the Board does not result in a hearing (includ- ing any settlement by the Board and a mort- gagee), any information regarding the nature of the violation and the resolution of the ac- tion shall be available to the public. (5) Publication The Secretary shall establish and publish in the Federal Register a description of and the cause for administrative action against a mortgagee. (6) Cease-and-desist orders (A) Whenever the Secretary, upon request of the Mortgagee Review Board, determines that there is reasonable cause to believe that a mortgagee is violating, has violated, or is about to violate, a law, rule or regulation or any condition imposed in writing by the Sec- retary or the Board, and that such violation could result in significant cost to the Federal Government or the public, the Secretary may issue a temporary order requiring the mort- gagee to cease and desist from any such viola- tion and to take affirmative action to prevent such violation or a continuation of such viola- tion pending completion of proceedings of the Board with respect to such violation. Such order shall include a notice of charges in re- spect thereof and shall become effective upon service to the mortgagee. Such order shall re- main effective and enforceable for a period not to exceed 30 days pending the completion of proceedings of the Board with respect to such violation, unless such order is set aside, lim- ited, or suspended by a court in proceedings authorized by subparagraph (B) of this para- graph. The Board shall provide the mortgagee an opportunity for a hearing on the record, as soon as practicable but not later than 20 days after the temporary cease-and-desist order has been served. (B) Within 10 days after the mortgagee has been served with a temporary cease-and-desist order, the mortgagee may apply to the United States district court for the judicial district in which the home office of the mortgagee is lo- cated, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting of suspending the en- forcement, operation, or effectiveness of such order pending the completion of the adminis- trative proceedings pursuant to the notice of charges served upon the mortgagee, and such court shall have jurisdiction to issue such in- junction. (C) In the case of violation or threatened violation of, or failure to obey, a temporary cease-and-desist order issued pursuant to this paragraph, the Secretary may apply to the United States district court, or the United States court of any territory, within the juris- diction of which the home office of the mort- gagee is located, for an injunction to enforce such order, and, if the court shall determine that there has been such violation or threat- ened violation or failure to obey, it shall be the duty of the court to issue such injunction. (7) ‘‘Mortgagee’’ defined For purposes of this subsection, the term ‘‘mortgagee’’ means— (A) a mortgagee approved under this chap- ter; (B) a lender or a loan correspondent ap- proved under subchapter I of this chapter; (C) a branch office or subsidiary of the mortgagee, lender, or loan correspondent; or (D) a director, officer, employee, agent, or other person participating in the conduct of the affairs of the mortgagee, lender, or loan correspondent. (8) Report required The Board, in consultation with the Federal Housing Administration Advisory Board, shall annually recommend to the Secretary such amendments to statute or regulation as the Board determines to be appropriate to ensure the long term financial strength of the Fed- eral Housing Administration fund and the ade- quate support for home mortgage credit. (9) Prohibition against limitations on Mort- gagee Review Board’s power to take action against mortgagees No State or local law, and no Federal law (except a Federal law enacted expressly in limitation of this subsection after the effec- tive date of this sentence), shall preclude or limit the exercise by the Board of its power to take any action authorized under paragraphs (3) and (6) of this subsection against any mort- gagee. (d) Limitations on participation in origination and mortgagee approval (1) Requirement Any person or entity that is not approved by the Secretary to serve as a mortgagee, as such term is defined in subsection (c)(7), shall not participate in the origination of an FHA-in- sured loan except as authorized by the Sec- retary. (2) Eligibility for approval In order to be eligible for approval by the Secretary, an applicant mortgagee shall not be, and shall not have any officer, partner, di- rector, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the applicant mortgagee who is— (A) currently suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under part 25 of title 24 of the Code of Federal Regulations, 2 Code of Federal Regulations, part 180 as imple- mented by part 2424, or any successor regula- tions to such parts, or under similar provi- sions of any other Federal agency; (B) under indictment for, or has been con- victed of, an offense that reflects adversely upon the applicant’s integrity, competence or fitness to meet the responsibilities of an approved mortgagee; (C) subject to unresolved findings con- tained in a Department of Housing and Urban Development or other governmental audit, investigation, or review; Page 537 TITLE 12—BANKS AND BANKING § 1708 3 So in original. Probably should be ‘‘contendere’’. 4 So in original. Probably should be ‘‘paragraph’’. 5 So in original. Probably should be ‘‘and’’. (D) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility; (E) convicted of, or who has pled guilty or nolo contendre 3 to, a felony related to par- ticipation in the real estate or mortgage loan industry— (i) during the 7-year period preceding the date of the application for licensing and registration; or (ii) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering; (F) in violation of provisions of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any applicable provi- sion of State law; or (G) in violation of any other requirement as established by the Secretary. (3) Rulemaking and implementation The Secretary shall conduct a rulemaking to carry out this subsection. The Secretary shall implement this subsection not later than the expiration of the 60-day period beginning upon May 20, 2009, by notice, mortgagee letter, or interim final regulations, which shall take ef- fect upon issuance. (e) Coordination of GNMA and FHA withdrawal action (1) Whenever the Federal Housing Administra- tion or Government National Mortgage Associa- tion initiates proceedings that could lead to withdrawing the mortgagee from participating in the program, the initiating agency shall— (A) within 24 hours notify the other agency in writing of the action taken; (B) provide to the other agency the factual basis for the action taken; and (C) if a mortgagee is withdrawn, publish its decision in the Federal Register. (2) Within 60 days of receipt of a notification of action that could lead to withdrawal under subsection 4 (1), the Federal Housing Adminis- tration or the Government National Mortgage Association shall— (A) conduct and complete its own investiga- tion; (B) provide written notification to the other agency of its decision, including the factual basis for its decision; and (C) if a mortgagee is withdrawn, publish its decision in the Federal Register. (f) Suspension or revocation of approval of mort- gagee; notice and statement of reasons Whenever the Secretary has taken any discre- tionary action to suspend or revoke the ap- proval of any mortgagee to participate in any mortgage insurance program under this sub- chapter, the Secretary shall provide prompt no- tice of the action and a statement of the reasons for the action to— (1) the Secretary of Veterans Affairs; (2) the chief executive officer of the Federal National Mortgage Association; (3) the chief executive officer of the Federal Home Loan Mortgage Corporation; (4) the Secretary of Agriculture; (5) if the mortgagee is a national bank, a subsidiary or affiliate of such bank, a Federal savings association or a subsidiary or affiliate of a savings association, the Comptroller of the Currency; (6) if the mortgagee is a State bank that is a member of the Federal Reserve System or a subsidiary or affiliate of such a bank, or a bank holding company or a subsidiary or affil- iate of such a company, the Board of Gov- ernors of the Federal Reserve System; and (7) if the mortgagee is a State bank or State savings association that is not a member of the Federal Reserve System or is a subsidiary or affiliate of such a bank, the Board of Direc- tors of the Federal Deposit Insurance Corpora- tion. (g) Appraisal standards (1) The Secretary shall prescribe standards for the appraisal of all property to be insured by the Federal Housing Administration. Such apprais- als shall be performed in accordance with uni- form standards, by individuals who have dem- onstrated competence and whose professional conduct is subject to effective supervision. These standards shall require at a minimum— (A) that the appraisals of properties to be in- sured by the Federal Housing Administration shall be performed in accordance with gen- erally accepted appraisal standards, such as the appraisal standards promulgated by the Appraisal Foundation a not-for-profit corpora- tion established on November 30, 1987 under the laws of Illinois; and (B) that each appraisal be a written state- ment used in connection with a real estate transaction that is independently an 5 impar- tially prepared by a licensed or certified ap- praiser setting forth an opinion of defined value of an adequately described property as of a specific date, supported by presentation and analysis of relevant market information. (2) The Appraisal Subcommittee of the Federal Financial Institutions Examination Council shall include the Secretary or his designee. (3) DIRECT ENDORSEMENT PROGRAM.— (A) Any mortgagee that is authorized by the Secretary to process mortgages as a direct en- dorsement mortgagee (pursuant to the single- family home mortgage direct endorsement program established by the Secretary) may contract with an appraiser chosen at the dis- cretion of the mortgagee for the performance of appraisals in connection with such mort- gages. Such appraisers may include appraisal companies organized as corporations, partner- ships, or sole proprietorships. (B) Any appraisal conducted pursuant to subparagraph (A) shall be conducted by an in- dividual who complies with the qualifications or standards for appraisers established by the Secretary pursuant to this subsection. (C) In conducting an appraisal, such indi- vidual may utilize the assistance of others, who shall be under the direct supervision of Page 538 TITLE 12—BANKS AND BANKING § 1708 the individual responsible for the appraisal. The individual responsible for the appraisal shall personally approve and sign any ap- praisal report. (4) FEE PANEL APPRAISERS.— (A) Any individual who is an employee of an appraisal company (including any company or- ganized as a corporation, partnership, or sole proprietorship) and who meets the qualifica- tions or standards for appraisers and inclusion on appraiser fee panels established by the Sec- retary, shall be eligible for assignment to con- duct appraisals for mortgages under this sub- chapter in the same manner and on the same basis as other approved appraisers. (B) With respect to any employee of an ap- praisal company described in subparagraph (A) who is offered an appraisal assignment in con- nection with a mortgage under this sub- chapter, the person utilizing the appraiser may contract directly with the appraisal com- pany employing the appraiser for the fur- nishing of the appraisal services. (5) ADDITIONAL APPRAISER STANDARDS.—Begin- ning on July 30, 2008, any appraiser chosen or ap- proved to conduct appraisals for mortgages under this subchapter shall— (A) be certified— (i) by the State in which the property to be appraised is located; or (ii) by a nationally recognized professional appraisal organization; and (B) have demonstrated verifiable education in the appraisal requirements established by the Federal Housing Administration under this subsection. (h) Use of name The Secretary shall, by regulation, require each mortgagee approved by the Secretary for participation in the FHA mortgage insurance programs of the Secretary— (1) to use the business name of the mort- gagee that is registered with the Secretary in connection with such approval in all adver- tisements and promotional materials, as such terms are defined by the Secretary, relating to the business of such mortgagee in such mort- gage insurance programs; and (2) to maintain copies of all such advertise- ments and promotional materials, in such form and for such period as the Secretary re- quires. (June 27, 1934, ch. 847, title II, § 202, 48 Stat. 1248; Feb. 3, 1938, ch. 13, § 3, 52 Stat. 10; June 3, 1939, ch. 175, § 5, 53 Stat. 805; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 101–235, title I, § 142, Dec. 15, 1989, 103 Stat. 2030; Pub. L. 101–625, title III, § 322, Nov. 28, 1990, 104 Stat. 4134; Pub. L. 102–550, title V, §§ 502, 518, 519, Oct. 28, 1992, 106 Stat. 3778, 3792; Pub. L. 105–65, title V, § 551, Oct. 27, 1997, 111 Stat. 1412; Pub. L. 106–377, § 1(a)(1) [title II, § 209(c)], Oct. 27, 2000, 114 Stat. 1441, 1441A–25; Pub. L. 110–289, div. A, title IV, § 1404, div. B, title I, §§ 2116(1), (3), 2118(a), July 30, 2008, 122 Stat. 2810, 2832, 2833; Pub. L. 111–22, div. A, title II, § 203(a), (b), May 20, 2009, 123 Stat. 1643; Pub. L. 111–203, title III, § 373, July 21, 2010, 124 Stat. 1566; Pub. L. 117–286, § 4(a)(54), Dec. 27, 2022, 136 Stat. 4311.) Editorial Notes REFERENCES IN TEXT The Federal Credit Reform Act of 1990, referred to in subsec. (a)(1), is title V of Pub. L. 93–344, as added by Pub. L. 101–508, title XIII, § 13201(a), Nov. 5, 1990, 104 Stat. 1388–609, which is classified generally to sub- chapter III (§ 661 et seq.) of chapter 17A of Title 2, The Congress. For complete classification of this Act to the Code, see Short Title note set out under section 621 of Title 2 and Tables. Section 3537b(c) of title 42, referred to in subsec. (b)(5), was in the original ‘‘section 112(c) of the Depart- ment of Housing and Urban Development Reform Act of 1989’’, meaning section 112 of Pub. L. 101–235, which does not contain a subsec. (c), but enacted section 13 of the Department of Housing and Urban Development Act, which was classified to section 3537b of title 42 prior to repeal by Pub. L. 104–65, § 11(b)(1), Dec. 19, 1995, 109 Stat. 701, and which contained a subsec. (c) relating to reg- istration with the Secretary. The Equal Credit Opportunity Act, referred to in sub- sec. (c)(1), (3)(B), is title VII of Pub. L. 90–321, as added by Pub. L. 93–495, title V, § 503, Oct. 28, 1974, 88 Stat. 1521, which is classified generally to subchapter IV (§ 1691 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of Title 15 and Tables. The Fair Housing Act, referred to in subsec. (c)(1), (3)(B), is title VIII of Pub. L. 90–284, Apr. 11, 1968, 82 Stat. 81, which is classified principally to subchapter I (§ 3601 et seq.) of chapter 45 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 3601 of Title 42 and Tables. Executive Order 11063, referred to in subsec. (c)(1), (3)(B), is set out as a note under section 1982 of Title 42. This chapter, referred to in subsec. (c)(7)(A), 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. The effective date of this sentence, referred to in sub- sec. (c)(9), is the date of enactment of Pub. L. 111–22, which enacted par. (9) and was approved May 20, 2009. The S.A.F.E. Mortgage Licensing Act of 2008, referred to in subsec. (d)(2)(F), is title V of div. A of Pub. L. 110–289, July 30, 2008, 122 Stat. 2810, also known as the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which is classified generally to chapter 51 (§ 5101 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 5101 of this title and Tables. CODIFICATION Section 1709(s) of this title, which was transferred and redesignated as subsec. (e) of this section by Pub. L. 110–289, div. B, title I, § 2116(3), July 30, 2008, 122 Stat. 2832, was based on act June 27, 1934, ch. 847, title II, § 203(s), as added Pub. L. 101–235, title I, § 135, Dec. 15, 1989, 103 Stat. 2028; amended Pub. L. 108–386, § 8(b), Oct. 30, 2004, 118 Stat. 2231; Pub. L. 110–289, div. B, title I, § 2116(2), July 30, 2008, 122 Stat. 2832. AMENDMENTS 2022—Subsec. (b). Pub. L. 117–286, § 4(a)(54)(A), sub- stituted ‘‘chapter 10 of title 5.’’ for ‘‘the Federal Advi- sory Committee Act.’’ in introductory provisions. Subsec. (b)(10). Pub. L. 117–286, § 4(a)(54)(B), sub- stituted ‘‘section 1006 of title 5,’’ for ‘‘Section 7 of the Federal Advisory Committee Act,’’. 2010—Subsec. (f)(5). Pub. L. 111–203, § 373(1), added par. (5) and struck out former par. (5) which read as follows: ‘‘if the mortgagee is a national bank, or a subsidiary or affiliate of such a bank, the Comptroller of the Cur- rency;’’. Subsec. (f)(6). Pub. L. 111–203, § 373(2), inserted ‘‘and’’ at end. Page 539 TITLE 12—BANKS AND BANKING § 1709 Subsec. (f)(7). Pub. L. 111–203, § 373(3), inserted ‘‘or State savings association’’ after ‘‘State bank’’ and sub- stituted period for ‘‘; and’’ at end. Subsec. (f)(8). Pub. L. 111–203, § 373(4), struck out par. (8) which read as follows: ‘‘if the mortgagee is a Federal or State savings association or a subsidiary or affiliate of a savings association, the Director of the Office of Thrift Supervision.’’ 2009—Subsec. (c)(2)(E). Pub. L. 111–22, § 203(a)(1)(A), in- serted ‘‘and’’ after semicolon at end. Subsec. (c)(2)(F). Pub. L. 111–22, § 203(a)(1)(B), sub- stituted ‘‘or their designees.’’ for ‘‘; and’’. Subsec. (c)(2)(G). Pub. L. 111–22, § 203(a)(1)(C), struck out subpar. (G), which read as follows: ‘‘the Director of the Enforcement Center; or their designees.’’ Subsec. (c)(9). Pub. L. 111–22, § 203(a)(2), added par. (9). Subsecs. (d) to (g). Pub. L. 111–22, § 203(b)(1), (2), added subsec. (d) and redesignated former subsecs. (d) to (f) as (e) to (g), respectively. Subsec. (h). Pub. L. 111–22, § 203(b)(3), added subsec. (h). 2008—Subsec. (a). Pub. L. 110–289, § 2118(a), amended subsec. (a) generally. Prior to amendment, text read as follows: ‘‘There is created a Mutual Mortgage Insur- ance Fund (hereinafter referred to as the ‘Fund’), which shall be used by the Secretary as a revolving fund for carrying out the provisions of this subchapter with re- spect to mortgages insured under section 1709 of this title as hereinafter provided, and there shall be allo- cated immediately to such Fund the sum of $10,000,000 out of funds made available to the Secretary for the purposes of this subchapter.’’ Subsec. (e). Pub. L. 110–289, § 2116(3), transferred sub- sec. (s) of section 1709 of this title and redesignated it as subsec. (e) of this section. See Codification note above. Former subsec. (e) redesignated (f). Subsec. (e)(3)(B). Pub. L. 110–289, § 2116(1)(A), made technical amendment to reference in original act which appears in text as reference to ‘‘this subsection’’. Subsec. (e)(5). Pub. L. 110–289, § 1404, added par. (5). Subsec. (f). Pub. L. 110–289, § 2116(1)(B), redesignated subsec. (e) as (f). 2000—Subsec. (c)(2)(E). Pub. L. 106–377, § 1(a)(1) [title II, § 209(c)(1)], struck out ‘‘and’’ at end. Subsec. (c)(2)(F). Pub. L. 106–377, § 1(a)(1) [title II, § 209(c)(2)], which directed substitution of ‘‘and’’ for ‘‘or their designees.’’, was executed by inserting ‘‘and’’ after semicolon to reflect the probable intent of Con- gress, because the phrase ‘‘or their designees.’’ ap- peared at end of par. (2) and did not appear in subpar. (F). Subsec. (c)(2)(G). Pub. L. 106–377, § 1(a)(1) [title II, § 209(c)(3)], added subpar. (G). 1997—Subsec. (c)(3)(C). Pub. L. 105–65 inserted after first sentence ‘‘Notwithstanding paragraph (4)(A), a suspension shall be effective upon issuance by the Board if the Board determines that there exists ade- quate evidence that immediate action is required to protect the financial interests of the Department or the public.’’ 1992—Subsec. (b)(11). Pub. L. 102–550, § 502, added par. (11). Subsec. (c)(3)(C). Pub. L. 102–550, § 518, inserted ‘‘tem- porarily’’ after ‘‘order’’, ‘‘(i)’’ after ‘‘Administration if’’, ‘‘(ii)’’ after ‘‘violations and’’, and ‘‘, and for not longer than 1 year. The Board may extend the suspen- sion for an additional 6 months if it determines the ex- tension is in the public interest. If the Board and the mortgagee agree, these time limits may be extended’’ after ‘‘6 months’’. Subsec. (c)(6)(D). Pub. L. 102–550, § 519(1), struck out subpar. (D) which read as follows: ‘‘For purposes of this paragraph, the term ‘mortgagee’ means a mortgagee, a branch office or subsidiary of a mortgagee, or a direc- tor, officer, employee, agent, or other person partici- pating in the conduct of the affairs of such mortgagee.’’ Subsec. (c)(7), (8). Pub. L. 102–550, § 519(2), added par. (7) and redesignated former par. (7) as (8). 1990—Subsec. (e)(3), (4). Pub. L. 101–625 added pars. (3) and (4). 1989—Pub. L. 101–235 substituted ‘‘Federal Housing Administration operations’’ for ‘‘Mutual Mortgage In- surance Fund’’ in section catchline, designated existing provisions as subsec. (a) and inserted heading, and added subsecs. (b) to (e). 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing. 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. 1939—Act June 3, 1939, substituted ‘‘created’’ for ‘‘cre- ate’’. 1938—Act Feb. 3, 1938, inserted ‘‘with respect to mort- gages insured under section 1709 of this title’’. Statutory Notes and Related Subsidiaries CHANGE OF NAME Committee on Banking, Finance and Urban Affairs of House of Representatives treated as referring to Com- mittee on Banking and Financial Services of House of Representatives by section 1(a) of Pub. L. 104–14, set out as a note preceding section 21 of Title 2, The Con- gress. Committee on Banking and Financial Services of House of Representatives abolished and replaced by Committee on Financial Services of House of Rep- resentatives, and jurisdiction over matters relating to securities and exchanges and insurance generally trans- ferred from Committee on Energy and Commerce of House of Representatives by House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the trans- fer date, see section 351 of Pub. L. 111–203, set out as a note under section 906 of Title 2, The Congress. EXPANDED REVIEW OF FHA MORTGAGEE APPLICANTS AND NEWLY APPROVED MORTGAGEES Pub. L. 111–22, div. A, title II, § 203(g), May 20, 2009, 123 Stat. 1648, provided that: ‘‘Not later than the expira- tion of the 3-month period beginning upon the date of the enactment of this Act [May 20, 2009], the Secretary of Housing and Urban Development shall— ‘‘(1) expand the existing process for reviewing new applicants for approval for participation in the mort- gage insurance programs of the Secretary for mort- gages on 1- to 4-family residences for the purpose of identifying applicants who represent a high risk to the Mutual Mortgage Insurance Fund; and ‘‘(2) implement procedures that, for mortgagees ap- proved during the 12-month period ending upon such date of enactment— ‘‘(A) expand the number of mortgages originated by such mortgagees that are reviewed for compli- ance with applicable laws, regulations, and policies; and ‘‘(B) include a process for random reviews of such mortgagees and a process for reviews that is based on volume of mortgages originated by such mortga- gees.’’ § 1709. Insurance of mortgages (a) Authorization The Secretary is authorized, upon application by the mortgagee, to insure as hereinafter pro- vided any mortgage offered to him which is eli- gible for insurance as hereinafter provided, and, upon such terms as the Secretary may prescribe, to make commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon. (b) Eligibility for insurance; mortgage limits To be eligible for insurance under this section a mortgage shall comply with the following: (1) Have been made to, and be held by, a mortgagee approved by the Secretary as re-