12 U.S.C. § 1715o — Interest rate on debentures; method of

Page 632 TITLE 12—BANKS AND BANKING § 1715o 1 So in original. to ensure mortgages under such section 223(d) with re- spect to healthcare facilities— ‘‘(1) insured under section 232 or section 242 of the National Housing Act (12 U.S.C. 1715w, 1715z–7); ‘‘(2) that were financially sound immediately prior to the President’s March 13, 2020 Proclamation on De- claring a National Emergency Concerning the Novel Coronavirus Disease (COVID–19) Outbreak [Proc. No. 9994, 50 U.S.C. 1621 note]; ‘‘(3) that have exhausted all other forms of assist- ance; and ‘‘(4) subject to— ‘‘(A) the limitation for new commitments to guarantee loans insured under the General and Spe- cial Risk Insurance Funds under the heading ‘Gen- eral and Special Risk Program Account’ for fiscal years 2020 and 2021; and ‘‘(B) the underwriting parameters and other terms and conditions that the Secretary determines appropriate through guidance. ‘‘(c) AMOUNT OF LOAN.—After all other realized or rea- sonably anticipated assistance (including reimburse- ments, loans, or other payments from other Federal sources) are taken into account, a loan insured under subsection (b) shall be in an amount not exceeding the lesser of— ‘‘(1) the temporary losses or additional expenses in- curred or expected to be incurred by the healthcare facility as a result of the impact of the circumstances giving rise to the President’s March 13, 2020 Procla- mation on Declaring a National Emergency Con- cerning the Novel Coronavirus Disease (COVID–19) Outbreak; or ‘‘(2) the amount expected to be needed to cover the sum of— ‘‘(A) 1 year of principal and interest payments for the existing loans of the healthcare facility insured by the Secretary; ‘‘(B) 1 year of principal and interest payments for the loan pursuant to this section; ‘‘(C) 1 year of mortgage insurance premiums for the loans described in subparagraphs (A) and (B); ‘‘(D) 1 year of monthly deposits to reserve ac- counts required by the Secretary for the loans de- scribed in subparagraphs (A) and (B); ‘‘(E) 1 year of property taxes and insurance for the healthcare facility; and ‘‘(F) transaction costs, including legal fees, for the loans described in subparagraphs (A) and (B).’’ STREAMLINED REFINANCING Pub. L. 103–233, title I, § 103(d), Apr. 11, 1994, 108 Stat. 361, provided that: ‘‘As soon as practicable, the Sec- retary shall implement a streamlined refinancing pro- gram under the authority provided in section 223 of the National Housing Act [12 U.S.C. 1715n] to prevent the default of mortgages insured by the FHA which cover multifamily housing projects, as defined in section 203(b) of the Housing and Community Development Amendments of 1978 [12 U.S.C. 1701z–11(b)].’’ DELEGATION OF PROCESSING OF MORTGAGE INSURANCE Secretary of Housing and Urban Development to im- plement system of mortgage insurance for mortgages insured under this section that delegates processing functions to selected approved mortgagees, with Sec- retary to retain authority to approve rents, expenses, property appraisals, and mortgage amounts and to exe- cute firm commitments, see section 328 of Pub. L. 101–625, set out as a note under section 1713 of this title. PURPOSE OF SECTION Act Aug. 2, 1954, ch. 649, title I, § 125, 68 Stat. 605, as amended by Pub. L. 90–19, § 10(b), May 25, 1967, 81 Stat. 22, in enacting this section, provided in part that the purpose thereof was to transfer to title II of the Na- tional Housing Act [this subchapter] ‘‘the mortgage in- surance program in connection with the sale of certain publicly owned property as contained in section 610 of title VI [section 1745 of this title]; the insurance of mortgages to refinance existing loans insured under section 608 of title VI and sections 903 and 908 of title IX [sections 1743, 1750b and 1750g of this title]; and to authorize the insurance under title II [this subchapter] of mortgages assigned to the Secretary of Housing and Urban Development under insurance contracts and mortgages held by the Secretary of Housing and Urban Development in connection with the sale of property acquired under insurance contracts’’. § 1715o. Interest rate on debentures; method of establishment Notwithstanding any other provisions of this chapter, debentures issued under any section of this chapter with respect to a loan or mortgage accepted for insurance on or after thirty days following August 2, 1954 (except debentures issued pursuant to paragraph (4) of section 1715l(g) of this title) shall bear interest at the rate in effect on the date the commitment to in- sure the loan or mortgage was issued, or the date the loan or mortgage was endorsed for in- surance, or (when there are two or more insur- ance endorsements) the date the loan or mort- gage was initially endorsed for insurance, whichever rate is the highest, except that deben- tures issued pursuant to section 1715k(f), 1715k(h)(7), 1715l(g), 1715x, or 1715z–3 of this title may, at the discretion of the Secretary, bear in- terest at the rate in effect on the date they are issued. The Secretary shall from time to time, with the approval of the Secretary of the Treas- ury, establish such interest rate in an amount not in excess of the annual rate of interest de- termined by the Secretary of the Treasury, at the request of the Secretary, by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the calendar month next preceding the estab- lishment of such rate of interest, on all out- standing marketable obligations of the United States having a maturity date of fifteen years or more from the first day of such next preceding month, and by adjusting such estimated average annual yield to the nearest one-eighth of 1 per centum. Notwithstanding the preceding sen- tence and the following paragraph,1 if an insur- ance claim is paid in cash for any mortgage that is insured under section 1709 or 1715y of this title and is endorsed for mortgage insurance after January 23, 2004, the debenture interest rate for purposes of calculating such a claim shall be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a con- stant maturity of 10 years. (June 27, 1934, ch. 847, title II, § 224, as added Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 606; amended Pub. L. 87–70, title VI, § 612(i), June 30, 1961, 75 Stat. 182; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 90–448, title I, § 104(b), Aug. 1, 1968, 82 Stat. 488; Pub. L. 108–199, div. G, title II, § 215, Jan. 23, 2004, 118 Stat. 394.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat. Page 633 TITLE 12—BANKS AND BANKING § 1715q 1 See References in Text note below. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables. AMENDMENTS 2004—Pub. L. 108–199, which directed amendment of section by adding sentence relating to interest rate for claim paid in cash at end of first paragraph, was exe- cuted by adding sentence at end of section to reflect the probable intent of Congress. 1968—Pub. L. 90–448 included debentures issued pursu- ant to section 1715z–3 of this title. 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing. 1961—Pub. L. 87–70 changed the date for determina- tion of the rate of interest for debentures, other than those issued pursuant to section 1715k(f), 1715k(h)(7), 1715l(g), 1715l(g)(4), or 1715x, from the rate in effect on the date the debentures are issued to the rate in effect on the date the commitment to insure the loan or mortgage was issued, or the date the loan or mortgage was endorsed for insurance, or (when there are two or more insurance endorsements) the date the loan or mortgage was initially endorsed for insurance, which- ever rate is highest. § 1715p. Insurance of advances under open-end mortgages; payment of charges; eligibility and conditions Notwithstanding any other provisions of this chapter, in connection with any mortgage in- sured pursuant to any section of this chapter which covers a property upon which there is lo- cated a dwelling designed principally for resi- dential use for not more than four families in the aggregate, the Secretary is authorized, upon such terms and conditions as he may prescribe, to insure under said section the amount of any advance for the improvement or repair of such property made to the mortgagor pursuant to an ‘‘open-end’’ provision in the mortgage, and to add the amount of such advance to the original principal obligation in determining the value of the mortgage for the purpose of computing the amounts of debentures and certificate of claim to which the mortgagee may be entitled: Pro- vided, That the Secretary may require the pay- ment of such charges, including charges in lieu of insurance premiums, as he may consider ap- propriate for the insurance of such ‘‘open-end’’ advances: Provided, further, That only advances for such improvements or repairs as substan- tially protect or improve the basic livability or utility of the property involved shall be eligible for insurance under this section; Provided fur- ther, That no such advance shall be insured under this section if the amount thereof plus the amount of the unpaid balance of the original principal obligation of the mortgage would ex- ceed the amount of such original principal obli- gation unless the mortgagor certifies that the proceeds of such advance will be used to finance the construction of additional rooms or other enclosed space as a part of the dwelling: And provided further, That the insurance of ‘‘open- end’’ advances shall not be taken into account in determining the aggregate amount of prin- cipal obligations of mortgages which may be in- sured under this chapter. (June 27, 1934, ch. 847, title II, § 225, as added Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 607; amended Pub. L. 90–19, § 1(a) (3), May 25, 1967, 81 Stat. 17.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, 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. AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing. § 1715q. Delivery of statement of appraisal or es- timates to home buyers The Secretary is authorized and directed to re- quire that in connection with any property upon which there is located a dwelling designed prin- cipally for a single-family residence or a two- family residence and which is approved for mortgage insurance under section 1709 or 1715e of this title with respect to any property or project of a corporation or trust of the character described in paragraph (2) of subsection (a) of section 1715e of this title, or sections 1715k, 1715l, 1715m,1 1715x, 1715y, 1715z(i), 1715z–2,1 or 1750b of this title, the seller or builder or such other person as may be designated by the Sec- retary shall agree to deliver, prior to the sale of the property, to the person purchasing such dwelling for his own occupancy, a written state- ment setting forth the amount of the appraised value of the property as determined by the Sec- retary. This section shall not apply in any case where the mortgage involved was insured or the commitment for such insurance was issued prior to August 2, 1954. Notwithstanding the first sen- tence of this section, the Secretary is authorized to require, in connection with any mortgage where the mortgage amount is computed on the basis of the Secretary’s estimate of the replace- ment cost of the property, or on the basis of any other estimates of the Secretary, that a written statement setting forth such estimate or esti- mates, as the case may be, be furnished under this section in lieu of a written statement set- ting forth the amount of the appraised value of the property. (June 27, 1934, ch. 847, title II, § 226, as added Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 607; amended Pub. L. 85–104, title I, § 115, July 12, 1957, 71 Stat. 298; Pub. L. 87–70, title VI, § 612(j), June 30, 1961, 75 Stat. 182; Pub. L. 90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17; Pub. L. 90–448, title I, § 102(b), Aug. 1, 1968, 82 Stat. 486.) Editorial Notes REFERENCES IN TEXT Section 1715m of this title, referred to in text, was re- pealed by Pub. L. 110–289, div. B, title I, § 2120(a)(5), July 30, 2008, 122 Stat. 2835. Section 1715z–2 of this title, referred to in text, was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(6), July 30, 2008, 122 Stat. 2835. AMENDMENTS 1968—Pub. L. 90–448 inserted references to sections 1715z(i) and 1715z–2 of this title. 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing, and ‘‘Secretary’s’’ for ‘‘Commissioner’s’’.