12 U.S.C. § 1710 — Payment of insurance

Page 559 TITLE 12—BANKS AND BANKING § 1710 5, 1988, 101 Stat. 1907; Pub. L. 102–54, § 13(d)(1), June 13, 1991, 105 Stat. 274.) Editorial Notes CODIFICATION Section was enacted as part of the Housing and Urban Development Act of 1970, and not as part of the Na- tional Housing Act which comprises this chapter. AMENDMENTS 1991—Par. (1). Pub. L. 102–54 substituted ‘‘Department of Veterans Affairs’’ for ‘‘Veterans’ Administration’’ in two places. 1988—Pub. L. 100–242 inserted parenthetical reference to condominiums and cooperatives in par. (1), sub- stituted ‘‘due, regardless of whether the purchaser is obligated on the loan’’ for ‘‘due’’ in par. (2), and sub- stituted ‘‘$250,000’’ for ‘‘$5,000’’ and ‘‘5’’ for ‘‘three’’ in closing provisions. § 1709a. Determination of loan-to-value ratios The Secretary of Housing and Urban Develop- ment, in establishing maximum loan-to-value ratios for mortgages insured by him under the National Housing Act [12 U.S.C. 1701 et seq.], as amended by sections 101, 102, and 103 of this Act, shall determine that such ratios are in the pub- lic interest after taking into consideration (1) the effect of such ratios on the national econ- omy and on conditions in the building industry, and (2) the availability or unavailability of resi- dential mortgage credit assisted under the Serv- icemen’s Readjustment Act of 1944, as amended. (Pub. L. 85–104, title I, § 104, July 12, 1957, 71 Stat. 296; Pub. L. 90–19, § 14(a), May 25, 1967, 81 Stat. 24.) Editorial Notes REFERENCES IN TEXT The National Housing Act, referred to in text, is 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 section 1701 of this title and Tables. Amendments by sections 101, 102, and 103 of this act, referred to in text, refers to amendment of sections 1709(b), (i), 1715k(d)(3), and 1715m(b) of this title by Pub. L. 85–104. Section 1709(i) of this title was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(1), July 30, 2008, 122 Stat. 2835. Section 1715m of this title was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(5), July 30, 2008, 122 Stat. 2835. The Servicemen’s Readjustment Act of 1944, as amended, referred to in text, is act June 22, 1944, ch. 268, 58 Stat. 284, which was classified generally to chap- ter 11C (§§ 693 to 697g) of former Title 38, Pensions, Bo- nuses, and Veterans’ Relief, and which was repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958, 72 Stat. 1273, the first section of which enacted Title 38, Vet- erans’ Benefits. For distribution of sections 693 to 697g of former Title 38 to Title 38, Veterans’ Benefits, see Table preceding section 101 of Title 38, Veterans’ Bene- fits. CODIFICATION Section was enacted as part of the Housing Act of 1957, and not as part of the National Housing Act which comprises this chapter. AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘Federal Housing Com- missioner’’. § 1709b. Repealed. Pub. L. 85–364, § 6, Apr. 1, 1958, 72 Stat. 77 Section, Pub. L. 85–104, title VI, § 605, July 12, 1957, 71 Stat. 305, authorized Federal Housing Commissioner and Administrator of Veterans’ Affairs to fix reason- able limits on charges, fees, and discounts imposed upon builders, sellers, or purchasers. § 1710. Payment of insurance (a) In general (1) Authorized claims procedures The Secretary may, in accordance with this subsection and terms and conditions pre- scribed by the Secretary, pay insurance bene- fits to a mortgagee for any mortgage insured under section 1709 of this title through any of the following methods: (A) Assignment of mortgage The Secretary may pay insurance benefits whenever a mortgage has been in a mone- tary default for not less than 3 full monthly installments or whenever the mortgagee is entitled to foreclosure for a nonmonetary default. Insurance benefits shall be paid pur- suant to this subparagraph only upon the as- signment, transfer, and delivery to the Sec- retary of— (i) all rights and interests arising under the mortgage; (ii) all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction; (iii) title evidence satisfactory to the Secretary; and (iv) such records relating to the mort- gage transaction as the Secretary may re- quire. (B) Conveyance of title to property The Secretary may pay insurance benefits if the mortgagee has acquired title to the mortgaged property through foreclosure or has otherwise acquired such property from the mortgagor after a default upon— (i) the prompt conveyance to the Sec- retary of title to the property which meets the standards of the Secretary in force at the time the mortgage was insured and which is evidenced in the manner provided by such standards; and (ii) the assignment to the Secretary of all claims of the mortgagee against the mortgagor or others, arising out of mort- gage transaction or foreclosure pro- ceedings, except such claims as may have been released with the consent of the Sec- retary. The Secretary may permit the mortgagee to tender to the Secretary a satisfactory con- veyance of title and transfer of possession directly from the mortgagor or other appro- priate grantor, and may pay to the mort- gagee the insurance benefits to which it would otherwise be entitled if such convey- ance had been made to the mortgagee and from the mortgagee to the Secretary. (C) Claim without conveyance of title The Secretary may pay insurance benefits upon sale of the mortgaged property at fore- Page 560 TITLE 12—BANKS AND BANKING § 1710 1 So in original. closure where such sale is for at least the fair market value of the property (with ap- propriate adjustments), as determined by the Secretary, and upon assignment to the Secretary of all claims referred to in clause (ii) of subparagraph (B). (D) Preforeclosure sale The Secretary may pay insurance benefits upon the sale of the mortgaged property by the mortgagor after default and the assign- ment to the Secretary of all claims referred to in clause (ii) of subparagraph (B), if— (i) the sale of the mortgaged property has been approved by the Secretary; (ii) the mortgagee receives an amount at least equal to the fair market value of the property (with appropriate adjustments), as determined by the Secretary; and (iii) the mortgagor has received an ap- propriate disclosure, as determined by the Secretary. (2) Payment for loss mitigation The Secretary may pay insurance benefits to the mortgagee to recompense the mortgagee for all or part of any costs of the mortgagee for taking loss mitigation actions that provide an alternative to foreclosure of a mortgage that is in default or faces imminent default, as defined by the Secretary (including but not limited to actions such as special forbearance, loan modification, support for borrower hous- ing counseling, partial claims, borrower incen- tives, preforeclosure sale, and deeds in lieu of foreclosure, but not including assignment of mortgages to the Secretary under section sub- section 1 (a)(1)(A) or section 1715u(c) of this title). No actions taken under this paragraph, nor any failure to act under this paragraph, by the Secretary or by a mortgagee shall be sub- ject to judicial review. (3) Determination of claims procedure The Secretary shall publish guidelines for determining which of the procedures for pay- ment of insurance under paragraph (1) are available to a mortgagee when it claims insur- ance benefits. At least one of the procedures for payment of insurance benefits specified in paragraph (1)(A) or (1)(B) shall be available to a mortgagee with respect to a mortgage, but the same procedure shall not be required to be available for all of the mortgages held by a mortgagee. (4) Servicing of assigned mortgages If a mortgage is assigned to the Secretary under paragraph (1)(A), the Secretary may permit the assigning mortgagee or its servicer to continue to service the mortgage for rea- sonable compensation and on terms and condi- tions determined by the Secretary. Neither the Secretary nor any servicer of the mort- gage shall be required to forbear from collec- tion of amounts due under the mortgage or otherwise pursue loss mitigation measures. (5) Calculation of insurance benefits Insurance benefits shall be paid in accord- ance with section 1735d of this title and shall be equal to the original principal obligation of the mortgage (with such additions and deduc- tions as the Secretary determines are appro- priate) which was unpaid upon the date of— (A) assignment of the mortgage to the Sec- retary; (B) the institution of foreclosure pro- ceedings; (C) the acquisition of the property after default other than by foreclosure; or (D) sale of the mortgaged property by the mortgagor. (6) Forbearance and recasting after default The mortgagee may, upon such terms and conditions as the Secretary may prescribe— (A) extend the time for the curing of the default and the time for commencing fore- closure proceedings or for otherwise acquir- ing title to the mortgaged property, to such time as the mortgagee determines is nec- essary and desirable to enable the mortgagor to complete the mortgage payments, includ- ing an extension of time beyond the stated maturity of the mortgage, and in the event of a subsequent foreclosure or acquisition of the property by other means the Secretary may include in the amount of insurance ben- efits an amount equal to any unpaid mort- gage interest; or (B) provide for a modification of the terms of the mortgage for the purpose of recasting, over the remaining term of the mortgage or over such longer period pursuant to guide- lines as may be prescribed by the Secretary, the total unpaid amount then due, with the modification to become effective currently or to become effective upon the termination of an agreed-upon extension of the period for curing the default; and the principal amount of the mortgage, as modified, shall be con- sidered the ‘‘original principal obligation of the mortgage’’ for purposes of paragraph (5). (7) Termination of premium obligation The obligation of the mortgagee to pay the premium charges for insurance shall cease upon fulfillment of the appropriate require- ments under which the Secretary may pay in- surance benefits, as described in paragraph (1). The Secretary may also terminate the mort- gagee’s obligation to pay mortgage insurance premiums upon receipt of an application filed by the mortgagee for insurance benefits under paragraph (1), or in the event the contract of insurance is terminated pursuant to section 1715t of this title. (8) Effect on payment of insurance benefits under section 1715u Nothing in this section shall limit the au- thority of the Secretary to pay insurance ben- efits under section 1715u of this title. (9) Treatment of mortgage assignment program Notwithstanding any other provision of law, or the Amended Stipulation entered as a con- sent decree on November 8, 1979, in Ferrell v. Cuomo, No. 73 C 334 (N.D. Ill.), or any other order intended to require the Secretary to op- erate the program of mortgage assignment and forbearance that was operated by the Sec- Page 561 TITLE 12—BANKS AND BANKING § 1710 2 So in original. Probably should be ‘‘mortgagee’’. retary pursuant to the Amended Stipulation and under the authority of section 1715u of this title, prior to its amendment by section 407(b) of The Balanced Budget Downpayment Act, I (Public Law 104–99; 110 Stat. 45), no mortgage assigned under this section may be included in any mortgage foreclosure avoid- ance program that is the same or substan- tially equivalent to such a program of mort- gage assignment and forbearance. (b) Consent to release of mortgagor or property The Secretary may at any time, under such terms and conditions as he may prescribe, 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 amounts Debentures issued under this section— (1) shall be in such form and amounts; (2) shall be subject to such terms and condi- tions; (3) shall include such provisions for redemp- tion, if any, as may be prescribed by the Sec- retary of Housing and Urban Development, with the approval of the Secretary of the Treasury; and (4) may be in book entry or certificated reg- istered form, or such other form as the Sec- retary of Housing and Urban Development may prescribe in regulations. (d) Debentures; issuance; negotiability; terms; tax exemptions The debentures issued under this section to any mortagee 2 with respect to mortgages in- sured under section 1709 of this title shall be issued in the name of the Mutual Mortgage In- surance Fund as obligor and shall be negotiable, and, if in book entry form, transferable, in the manner described by the Secretary in regula- tions. All such debentures shall be dated as of the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default: Provided, That deben- tures 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 estab- lish by regulation. The debentures shall bear in- terest from such date at a rate established by the Secretary pursuant to section 1715o of this title, payable semiannually on the 1st day of January and the 1st day of July of each year, and shall mature twenty years after the date thereof. Such debentures as are issued in ex- change for property covered by mortgages in- sured under section 1709 or section 1713 of this title prior to February 3, 1938 shall be subject only to such Federal, State, and local taxes as the mortgages in exchange for which they are issued would be subject to in the hands of the holder of the debentures and shall be a liability of the Mutual Mortgage Insurance Fund, but such debentures shall be fully and uncondition- ally guaranteed as to principal and interest by the United States; but any mortgagee entitled to receive any such debentures may elect to re- ceive in lieu thereof a cash adjustment and de- bentures issued as hereinafter provided and bearing the current rate of interest. Such deben- tures as are issued in exchange for property cov- ered by the mortgages insured after February 3, 1938, shall be exempt, both as to principal and interest, from all taxation (except surtaxes, es- tate, inheritance, and gift taxes) now or here- after imposed by the United States, by any Ter- ritory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority; and such debentures shall be paid out of the Mutual Mortgage Insurance Fund, which shall be primarily liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United States, and, in the case of debentures issued in certificated registered form, such guaranty shall be ex- pressed on the face of the debentures. In the event that the Mutual Mortgage Insurance Fund fails to pay upon demand, when due, the prin- cipal of or interest on any debentures issued under this section, the Secretary of the Treas- ury shall pay to the holders the amount thereof which is authorized to be appropriated, out of any money in the Treasury not otherwise appro- priated, 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 (1) Subject to paragraph (2), the certificate of claim issued by the Secretary to any mortgagee shall be for an amount which the Secretary de- termines to be sufficient, when added to the face value of the debentures issued and the cash ad- justment paid to the mortgagee, to equal the amount which the mortgagee would have re- ceived if, at the time of the conveyance to the Secretary of the property covered by the mort- gage, the mortgagor had redeemed the property and paid in full all obligations under the mort- gage and a reasonable amount for necessary ex- penses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisi- tion of the mortgaged property otherwise, and the conveyance thereof to the Secretary. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with respect to the face amount of such certifi- cate, an increment at the rate of 3 per centum per annum which shall not be compounded. The amount to which the holder of any such certifi- cate shall be entitled shall be determined as pro- vided in subsection (f). (2) A certificate of claim shall not be issued and the provisions of paragraph (1) of this sub- section shall not be applicable in the case of a mortgage accepted for insurance pursuant to a commitment issued on or after September 2, 1964. (f) Division of excess proceeds; settlement of cer- tificates of claims and refunds to mortgagors (1) If, after deducting (in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound account- ing practice) the expenses incurred by the Sec- retary, the net amount realized from any prop- erty conveyed to the Secretary under this sec- Page 562 TITLE 12—BANKS AND BANKING § 1710 tion and the claims assigned therewith exceed the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be divided as follows: (i) If such excess is greater than the total amount payable under the certificate of claim issued in connection with such property, the Secretary shall pay to the holder of such cer- tificate the full amount so payable, and any excess remaining thereafter shall be paid to the mortgagor of such property if the mort- gage was insured under section 1709 of this title: Provided, That on and after September 2, 1964, any excess remaining after payment to the holder of the full amount of the certificate of claim, together with the accrued interest increment thereon, shall be retained by the Secretary and credited to the applicable insur- ance fund; and (ii) If such excess is equal to or less than the total amount payable under such certificate of claim, the Secretary shall pay to the holder of such certificate the full amount of such ex- cess. (2) Notwithstanding any other provisions of this section, the Secretary is authorized, with respect to mortgages insured pursuant to com- mitments for insurance issued after August 11, 1955, and, with the consent of the mortgagee or mortgagor, as the case may be, with respect to mortgages insured pursuant to commitments issued prior to such date, to effect the settle- ment of certificates of claim and refunds to mortgagors at any time after the sale or trans- fer of title to the property conveyed to the Sec- retary under this section and without awaiting the final liquidation of such property for the purpose of determining the net amount to be re- alized therefrom: Provided, That the settlement authority created by the Housing Amendments of 1955 shall be terminated with respect to any certificates of claim outstanding as of Sep- tember 2, 1964. (3) With the consent of the holder thereof, the Secretary is authorized, without awaiting the final liquidation of the Secretary’s interest in the property, to settle any certificate of claim issued pursuant to subsection (e), with respect to which settlement had not been effected prior to September 2, 1964, by making payment in cash to the holder thereof of such amount not exceeding the face amount of the certificate of claim, together with the accrued interest there- on, as the Secretary may consider appropriate: Provided, That in any case where the certificate of claim is settled in accordance with the provi- sions of this paragraph, any amounts realized after September 2, 1964, in the liquidation of the Secretary’s interest in the property, shall be re- tained by the Secretary and credited to the ap- plicable insurance fund. (g) Handling and disposal of property; settlement of claims Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Sec- retary shall have power to deal with, complete, rent, renovate, modernize, insure, or sell for cash or credit, in his discretion, any properties conveyed to him in exchange for debentures and certificates of claim as provided in this section; and notwithstanding any other provision of law, the Secretary shall also have power to pursue to final collection, by way of compromise or other- wise, all claims against mortgagors assigned by mortgagees to the Secretary as provided in this section: Provided, That section 6101 of title 41 shall not be construed to apply to any contract for hazard insurance, or to any purchase or con- tract for services or supplies on account of such property if the amount thereof does not exceed $1,000. The Secretary shall, by regulation, carry out a program of sales of such properties and shall develop and implement appropriate credit terms and standards to be used in carrying out the program. The power to convey and to exe- cute in the name of the Secretary deeds of con- veyance, deeds of release, assignments and satis- factions of mortgages, and any other written in- strument relating to real or personal property or any interest therein heretofore or hereafter acquired by the Secretary pursuant to the provi- sions of this chapter, may be exercised by an of- ficer appointed by him, without the execution of any express delegation of power or power of at- torney: Provided, That nothing in this sub- section shall be construed to prevent the Sec- retary from delegating such power by order or by power of attorney, in his discretion, to any officer, agent, or employee he may appoint: And provided further, That a conveyance or transfer of title to real or personal property or an inter- est therein to the Secretary of Housing and Urban Development, his successors and assigns, without identifying the Secretary therein, shall be deemed a proper conveyance or transfer to the same extent and of like effect as if the Sec- retary were personally named in such convey- ance or transfer. The Secretary may sell real and personal property acquired by the Secretary pursuant to the provisions of this chapter on such terms and conditions as the Secretary may prescribe. (h) Disposition of assets in revitalization areas (1) In general The purpose of this subsection is to require the Secretary to carry out a program under which eligible assets (as such term is defined in paragraph (2)) shall be made available for sale in a manner that promotes the revitaliza- tion, through expanded homeownership oppor- tunities, of revitalization areas. Notwith- standing the authority under the last sentence of subsection (g), the Secretary shall dispose of all eligible assets under the program and shall establish the program in accordance with the requirements under this subsection. (2) Eligible assets For purposes of this subsection, the term ‘‘eligible asset’’ means any of the following categories of assets of the Secretary, unless the Secretary determines at any time that the asset property is economically or otherwise infeasible to rehabilitate or that the best use of the asset property is as open space (includ- ing park land): (A) Properties Any property that— Page 563 TITLE 12—BANKS AND BANKING § 1710 (i) is designed as a dwelling for occu- pancy by 1 to 4 families; (ii) is located in a revitalization area; (iii) was previously subject to a mort- gage insured under the provisions of this chapter; and (iv) is owned by the Secretary pursuant to the payment of insurance benefits under this chapter. (B) Mortgages Any mortgage that— (i) is an interest in a property that meets the requirements of clauses (i) and (ii) of subparagraph (A); (ii) was previously insured under the pro- visions of this chapter except for mort- gages insured under or made pursuant to sections 1715z, 1715z–12, or 1715z–20 of this title; and (iii) is held by the Secretary pursuant to the payment of insurance benefits under this chapter. For purposes of this subsection, an asset under this subparagraph shall be considered to be located in a revitalization area, or in the asset control area of a preferred pur- chaser, if the property described in clause (i) is located in such area. (3) Revitalization areas The Secretary shall designate areas as revi- talization areas for purposes of this sub- section. Before designation of an area as a re- vitalization area, the Secretary shall consult with affected units of general local govern- ment, States, and Indian tribes and interested nonprofit organizations. The Secretary may designate as revitalization areas only areas that meet one of the following requirements: (A) Very-low income area The median household income for the area is less than 60 percent of the median house- hold income for— (i) in the case of any area located within a metropolitan area, such metropolitan area; or (ii) in the case of any area not located within a metropolitan area, the State in which the area is located. (B) High concentration of eligible assets A high rate of default or foreclosure for single family mortgages insured under this chapter has resulted, or may result, in the area— (i) having a disproportionately high con- centration of eligible assets, in comparison with the concentration of such assets in surrounding areas; or (ii) being detrimentally impacted by eli- gible assets in the vicinity of the area. (C) Low home ownership rate The rate for home ownership of single fam- ily homes in the area is substantially below the rate for homeownership in the metro- politan area. (4) Preference for sale to preferred purchasers The Secretary shall provide a preference, among prospective purchasers of eligible as- sets, for sale of such assets to any purchaser who— (A) is— (i) the unit of general local government, State, or Indian tribe having jurisdiction with respect to the area in which are lo- cated the eligible assets to be sold; or (ii) a nonprofit organization; (B) in making a purchase under the pro- gram under this subsection— (i) establishes an asset control area, which shall be an area that consists of part or all of a revitalization area; and (ii) purchases all assets of the Secretary in the category or categories of eligible as- sets set forth in the sale agreement re- quired under paragraph (7) that, at any time during the period which shall be set forth in the sale agreement— (I) are or become eligible for purchase under this subsection; and (II) are located in the asset control area of the purchaser; and (C) has the capacity to carry out the pur- chase of the category or categories of eligi- ble assets set forth in the sale agreement under the program under this subsection and under the provisions of this paragraph. (5) Agreements required for purchase (A) Preferred purchasers Under the program under this subsection, the Secretary may sell an eligible asset as provided in paragraph (4) to a preferred pur- chaser only pursuant to a binding agreement by the preferred purchaser that the eligible asset will be used in conjunction with a home ownership plan that provides as fol- lows: (i) The plan has as its primary purpose the expansion of home ownership in, and the revitalization of, the asset control area, established pursuant to paragraph (4)(B)(i) by the purchaser, in which the eli- gible asset is located. (ii) Under the plan, the preferred pur- chaser has established, and agreed to meet, specific performance goals for in- creasing the rate of home ownership for el- igible assets in the asset control area that are under the purchaser’s control. The plan shall provide that the Secretary may waive or modify such goals or deadlines only upon a determination by the Sec- retary that a good faith effort has been made in complying with the goals through the homeownership plan and that excep- tional neighborhood conditions prevented attainment of the goal. (iii) Under the plan, the preferred pur- chaser has established rehabilitation standards that meet or exceed the stand- ards for housing quality established under subparagraph (B)(iii) by the Secretary, and has agreed that each asset property for an eligible asset purchased will be rehabili- tated in accordance with such standards. (B) Non-preferred purchasers Under the program under this subsection, the Secretary may sell an eligible asset to a Page 564 TITLE 12—BANKS AND BANKING § 1710 3 So in original. There probably should be a period. purchaser who is not a preferred purchaser only pursuant to a binding agreement by the purchaser that complies with the following requirements: (i) The purchaser has agreed to meet spe- cific performance goals established by the Secretary for home ownership of the asset properties for the eligible assets purchased by the purchaser, except that the Sec- retary may, by including a provision in the sale agreement required under paragraph (7), provide for a lower rate of home owner- ship in sales involving exceptional cir- cumstances. (ii) The purchaser has agreed that each asset property for an eligible asset pur- chased will be rehabilitated to comply with minimum standards for housing qual- ity established by the Secretary for pur- poses of the program under this sub- section. (6) Discount for preferred purchasers (A) In general For the purpose of providing a public pur- pose discount for the bulk sales of eligible assets made under the program under this subsection by preferred purchasers, each eli- gible asset sold through the program under this subsection to a preferred purchaser shall be sold at a price that is discounted from the value of the asset, as based on the appraised value of the asset property (as such term is defined in paragraph (8)). (B) Appraisals The Secretary shall require that each ap- praisal of an eligible asset under this para- graph is based upon— (i) the market value of the asset prop- erty in its ‘‘as is’’ physical condition, which shall take into consideration age and condition of major mechanical and structural systems; and (ii) the value of the property appraised for home ownership. (C) Discounts The Secretary, in the sole discretion of the Secretary, shall establish the discount under this paragraph for an eligible asset. In deter- mining the discount, the Secretary may con- sider the condition of the asset property, the extent of resources available to the preferred purchaser, the comprehensive revitalization plan undertaken by such purchaser, the fi- nancial safety and soundness of the Mutual Mortgage Insurance Fund, and any other cir- cumstances the Secretary considers appro- priate 3 (7) Sale agreement The Secretary may sell an eligible asset under this subsection only pursuant to a sale agreement entered into under this paragraph with the purchaser, which shall include the following provisions: (A) Assets The sale agreement shall identify the cat- egory or categories of eligible assets to be purchased and, based on the purchaser’s ca- pacity to manage and dispose of assets, the maximum number of assets owned by the Secretary at the time the sale agreement is executed that shall be sold to the purchaser. (B) Revitalization area and asset control area The sale agreement shall identify— (i) the boundaries of the specific revital- ization areas (or portions thereof) in which are located the eligible assets that are cov- ered by the agreement; and (ii) in the case of a preferred purchaser, the asset control area established pursuant to paragraph (4)(B)(i) that is covered by the agreement. (C) Financing The sale agreement shall identify the sources of financing for the purchase of the eligible assets. (D) Binding agreements The sale agreement shall contain binding agreements by the purchaser sufficient to comply with— (i) in the case of a preferred purchaser, the requirements under paragraph (5)(A), which agreements shall provide that the eligible assets purchased will be used in conjunction with a home ownership plan meeting the requirements of such para- graph, and shall set forth the terms of the homeownership plan, including— (I) the goals of the plan for the eligible assets purchased and for the asset con- trol area subject to the plan; (II) the revitalization areas (or por- tions thereof) in which the homeowner- ship plan is operating or will operate; (III) the specific use or disposition of the eligible assets under the plan; and (IV) any activities to be conducted and services to be provided under the plan; or (ii) in the case of a purchaser who is not a preferred purchaser, the requirements under paragraph (5)(B). (E) Purchase price and discount The sale agreement shall establish the purchase price of the eligible assets, which in the case of a preferred purchaser shall provide for a discount in accordance with paragraph (6). (F) Housing quality The sale agreement shall provide for com- pliance of the eligible assets purchased with the rehabilitation standards established under paragraph (5)(A)(iii) or the minimum standards for housing quality established under paragraph (5)(B)(ii), as applicable, and shall specify such standards. (G) Performance goals and sanctions The sale agreement shall set forth the spe- cific performance goals applicable to the purchaser, in accordance with paragraph (5), shall set forth any sanctions for failure to meet such goals and deadlines, and shall re- quire the purchaser to certify compliance with such goals. (H) Period covered The sale agreement shall establish— Page 565 TITLE 12—BANKS AND BANKING § 1710 4 So in original. Probably should be ‘‘subsection.’’ 5 So in original. Probably should be section ‘‘1715z–13(i)(1)’’. (i) in the case of a preferred purchaser, the time period referred to in paragraph (4)(B)(ii); and (ii) in the case of a purchaser who is not a preferred purchaser, the time period for purchase of eligible assets that may be covered by the purchase. (I) Other terms The agreement shall contain such other terms and conditions as may be necessary to require that eligible assets purchased under the agreement are used in accordance with the program under this subsection. (8) Definitions For purposes of this subsection, the fol- lowing definitions shall apply: (A) Asset control area The term ‘‘asset control area’’ means the area established by a preferred purchaser pursuant to paragraph (4)(B)(i). (B) Asset property The term ‘‘asset property’’ means— (i) with respect to an eligible asset that is a property, such property; and (ii) with respect to an eligible asset that is a mortgage, the property that is subject to the mortgage. (C) Eligible asset The term ‘‘eligible asset’’ means an asset described in paragraph (2). (D) Nonprofit organization The term ‘‘nonprofit organization’’ means a private organization that— (i) is organized under State or local laws; (ii) has no part of its net earnings inur- ing to the benefit of any member, share- holder, founder, contributor, or individual; and (iii) complies with standards of financial responsibility that the Secretary may re- quire. (E) Preferred purchaser The term ‘‘preferred purchaser’’ means a purchaser described in paragraph (4). (F) Unit of general local government The term ‘‘unit of general local govern- ment’’ means any city, town, township, county, parish, village, or other general pur- pose political subdivision of a State, and any agency or instrumentality thereof that is es- tablished pursuant to legislation and des- ignated by the chief executive officer to act on behalf of the jurisdiction with regard to the provisions of this subsection. (G) State The term ‘‘State’’ means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, the Northern Mariana Islands, or any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the State with regard to provisions of this subjection.4 (H) Indian tribe The term ‘‘Indian tribe’’ has the same meaning as in section 1715z–13(i)(I) 5 of this title. (9) Secretary’s discretion The Secretary shall have the authority to implement and administer the program under this subsection in such manner as the Sec- retary may determine. The Secretary may, in the sole discretion of the Secretary, enter into contracts to provide for the proper adminis- tration of the program with such public or nonprofit entities as the Secretary determines are qualified. (10) Regulations The Secretary shall issue regulations to im- plement the program under this subsection through rulemaking in accordance with the procedures established under section 553 of title 5 regarding substantive rules. Such regu- lations shall take effect not later than the ex- piration of the 2-year period beginning on Oc- tober 21, 1998. (i) Mortgagor’s or mortgagee’s interest in prop- erty or claim conveyed No mortgagee or mortgagor shall have, and no certificate of claim shall be construed to give to any mortgagee or mortgagor, any right or inter- est in any property conveyed to the Secretary or in any claim assigned to him; nor shall the Sec- retary owe any duty to any mortgagee or mort- gagor with respect to the handling or disposal of any such property or the collection of any such claim. (j) Foreclosure; payment and cessation of obliga- tion In the event that any mortgagee under a mort- gage insured under section 1709 of this title (other than a mortgagee receiving insurance benefits under clause (1)(A) of the second sen- tence of subsection (a)) forecloses on the mort- gaged property but does not convey such prop- erty to the Secretary in accordance with this section, and the Secretary is given written no- tice thereof, or in the event that the mortgagor pays the obligation under the mortgage in full prior to the maturity thereof, and the mort- gagee pays any adjusted premium charge re- quired under the provisions of section 1709(c) of this title, and the Secretary is given written no- tice by the mortgagee of the payment of such obligation, the obligation to pay any subsequent premium charge for insurance shall cease, and all rights of the mortgagee and the mortgagor under this section shall terminate as of the date of such notice. (k) Repealed. Pub. L. 105–276, title VI, § 601(c), Oct. 21, 1998, 112 Stat. 2673 (l) Nullification of right of redemption of single family mortgagors (1) Whenever the Secretary or a contract mortgagee (pursuant to its contract with the Secretary) forecloses on a Secretary-held single family mortgage in any Federal or State court Page 566 TITLE 12—BANKS AND BANKING § 1710 6 So in original. Probably should be capitalized. or pursuant to a power of sale in a mortgage, the purchaser at the foreclosure sale shall be enti- tled to receive a conveyance of title to, and pos- session of, the property, subject to the interests senior to the interests of the Secretary or the contract mortgagee, as the case may be. Not- withstanding any State law to the contrary, there shall be no right of redemption (including in all instances any right to possession based upon any right of redemption) in the mortgagor or any other person subsequent to the fore- closure sale in connection with a Secretary-held single family mortgage. The appropriate State official or the trustee, as the case may be, shall execute and deliver a deed or other appropriate instrument conveying title to the purchaser at the foreclosure sale, consistent with applicable procedures in the jurisdiction and without re- gard to any such right of redemption. (2) The following actions shall be taken in order to verify title in the purchaser at the fore- closure sale: (A) In the case of a judicial foreclosure in any Federal or State court, there shall be in- cluded in the petition and in the judgment of foreclosure a statement that the foreclosure is in accordance with this subsection and that there is no right of redemption in the mort- gagor or any other person. (B) In the case of a foreclosure pursuant to a power of sale provision in the mortgage, the statement required in subparagraph (A) shall be included in the advertisement of the sale and either in the recitals of the deed or other appropriate instrument conveying title to the purchaser at the foreclosure sale or in an affi- davit or addendum to the deed. (3) For purposes of this subsection: (A) The term ‘‘contract mortgagee’’ means a person or entity under a contract with the Secretary that provides for the assignment of a single-family mortgage from the Secretary to the person or entity for the purpose of pur- suing foreclosure. (B) the 6 term ‘‘mortgage’’ means a deed of trust, mortgage, deed to secure debt, security agreement, or any other form of instrument under which any interest in property, real, personal, or mixed, or any interest in prop- erty, including leaseholds, life estates, rever- sionary interests, and any other estates under applicable State law, is conveyed in trust, mortgaged, encumbered, pledged, or otherwise rendered subject to a lien, for the purpose of securing the payment of money or the per- formance of an obligation. (C) The term ‘‘Secretary-held single family mortgage’’ means a single-family mortgage held by the Secretary or by a contract mort- gagee at the time of initiation of foreclosure that— (i) was formerly insured by the Secretary under any section of this subchapter; or (ii) was taken by the Secretary as a pur- chase money mortgage in connection with the sale or other transfer of Secretary- owned property under any section of this subchapter. (D) the term ‘‘single-family mortgage’’ means a mortgage that covers property on which is located a 1-to-4 family residence. (June 27, 1934, ch. 847, title II, § 204, 48 Stat. 1249; May 28, 1935, ch. 150, § 29(c), 49 Stat. 300; Feb. 19, 1937, ch. 12, 50 Stat. 20; Feb. 3, 1938, ch. 13, § 3, 52 Stat. 12; June 3, 1939, ch. 175, §§ 9, 10, 53 Stat. 806; June 28, 1941, ch. 261, § 9, 55 Stat. 365; Oct. 14, 1943, ch. 258, § 1, 57 Stat. 570; Aug. 10, 1948, ch. 832, title I, § 101(l), (q), 62 Stat. 1273, 1274; Apr. 20, 1950, ch. 94, title I, §§ 105, 122, 64 Stat. 52, 59; Sept. 1, 1951, ch. 378, title VI, § 604(a), 65 Stat. 314; Aug. 2, 1954, ch. 649, title I, §§ 111, 112(a), 113, 68 Stat. 593, 594; Aug. 11, 1955, ch. 783, title I, § 102(a), 69 Stat. 635; Pub. L. 85–104, title I, §§ 107, 108(a), July 12, 1957, 71 Stat. 297; Pub. L. 86–372, title I, §§ 114(b), 117, Sept. 23, 1959, 73 Stat. 662, 664; Pub. L. 87–70, title VI, § 612(b), (c), June 30, 1961, 75 Stat. 180; Pub. L. 88–560, title I, §§ 104(a), 105(a), Sept. 2, 1964, 78 Stat. 769, 770; Pub. L. 89–117, title XI, § 1108(d), Aug. 10, 1965, 79 Stat. 504; Pub. L. 90–19, § 1(a)(2), (3), (4), (d), May 25, 1967, 81 Stat. 17, 18; Pub. L. 98–181, title I [title IV, § 426], Nov. 30, 1983, 97 Stat. 1218; Pub. L. 100–242, title V, § 569, Feb. 5, 1988, 101 Stat. 1948; Pub. L. 100–628, title X, § 1064(a), (b), Nov. 7, 1988, 102 Stat. 3275; Pub. L. 101–235, title I, § 136, Dec. 15, 1989, 103 Stat. 2028; Pub. L. 102–550, title V, § 516(a), Oct. 28, 1992, 106 Stat. 3790; Pub. L. 104–99, title IV, § 407(a), Jan. 26, 1996, 110 Stat. 45; Pub. L. 104–134, title I, § 101(e) [title II, § 221(a)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–290; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 105–276, title VI, §§ 601(a), (c), (d), 602, Oct. 21, 1998, 112 Stat. 2670, 2673, 2674; Pub. L. 108–447, div. I, title II, § 221, Dec. 8, 2004, 118 Stat. 3320; Pub. L. 111–22, div. A, title II, § 203(c), May 20, 2009, 123 Stat. 1644.) Editorial Notes REFERENCES IN TEXT The Housing Amendments of 1955, referred to in sub- sec. (f)(2), is act Aug. 11, 1955, ch. 783, 69 Stat. 635. For complete classification of this Act to the Code, see Short Title of 1955 Amendments note set out under sec- tion 1701 of this title and Tables. This chapter, referred to in subsecs. (g) and (h), was in the original ‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables. CODIFICATION In subsec. (g), ‘‘section 6101 of title 41’’ substituted for ‘‘section 3709 of the Revised Statutes’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts. AMENDMENTS 2009—Subsec. (a)(2). Pub. L. 111–22, § 203(c)(3), sub- stituted ‘‘subsection (a)(1)(A) or section 1715u(c) of this title’’ for ‘‘paragraph (1)(A)’’. Pub. L. 111–22, § 203(c)(1), (2), inserted ‘‘or faces immi- nent default, as defined by the Secretary’’ after ‘‘de- fault’’ and ‘‘support for borrower housing counseling, partial claims, borrower incentives, preforeclosure sale,’’ after ‘‘loan modification,’’. 2004—Subsec. (h)(2). Pub. L. 108–447, § 221(1)(A), sub- stituted ‘‘following categories of assets of the Sec- retary, unless the Secretary determines at any time that the asset property is economically or otherwise in- feasible to rehabilitate or that the best use of the asset property is as open space (including park land)’’ for Page 567 TITLE 12—BANKS AND BANKING § 1710 ‘‘following assets of the Secretary’’ in introductory provisions. Subsec. (h)(2)(B)(ii). Pub. L. 108–447, § 221(1)(B), in- serted ‘‘except for mortgages insured under or made pursuant to sections 1715z, 1715z–12, or 1715z–20 of this title’’ after ‘‘chapter’’. Subsec. (h)(2)(C). Pub. L. 108–447, § 221(1)(C), struck out heading and text of subpar. (C). Text read as fol- lows: ‘‘Any contingent future interest of the Secretary in an asset described in subparagraph (A) or (B).’’ Subsec. (h)(3). Pub. L. 108–447, § 221(2), inserted ‘‘, States, and Indian tribes’’ after ‘‘government’’ in second sentence. Subsec. (h)(4)(A)(i). Pub. L. 108–447, § 221(3)(A), in- serted ‘‘, State, or Indian tribe’’ after ‘‘government’’. Subsec. (h)(4)(B)(ii). Pub. L. 108–447, § 221(3)(B), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: ‘‘purchases all interests of the Sec- retary in all assets of the Secretary that, at any time during the period which shall be set forth in the sale agreement required under paragraph (7)— ‘‘(I) are or become eligible assets; and ‘‘(II) are located in the asset control area of the purchaser; and’’. Subsec. (h)(4)(C). Pub. L. 108–447, § 221(3)(C), sub- stituted ‘‘purchase of the category or categories of eli- gible assets set forth in the sale agreement under’’ for ‘‘purchase of eligible assets under’’. Subsec. (h)(6)(C). Pub. L. 108–447, § 221(4)(A), amended heading and text of subpar. (C) generally. Prior to amendment, subpar. (C) set out discount classes, in- cluding standard, deep, and minimal discounts. Subsec. (h)(6)(D). Pub. L. 108–447, § 221(4)(B), struck out heading and text of subpar. (D). Text read as fol- lows: ‘‘The Secretary shall, in the sole discretion of the Secretary, establish a method for determining which discount under clause (i) or (ii) subparagraph (C) shall be provided for an eligible asset that is described in such clause (i) and sold to a preferred purchaser. The method may result in the assignment of discounts on any basis consistent with subparagraph (C) that the Secretary considers appropriate to carry out the pur- poses of this subsection.’’ Subsec. (h)(7)(A). Pub. L. 108–447, § 221(5), substituted ‘‘category or categories of eligible assets to be pur- chased and, based on the purchaser’s capacity to man- age and dispose of assets, the maximum number of as- sets owned by the Secretary at the time the sale agree- ment is executed that shall be sold to the purchaser’’ for ‘‘eligible assets to be purchased and the interests sold’’. Subsec. (h)(8)(F). Pub. L. 108–447, § 221(6)(A), inserted ‘‘, and any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the juris- diction with regard to the provisions of this sub- section’’ after ‘‘State’’. Subsec. (h)(8)(G), (H). Pub. L. 108–447, § 221(6)(B), added subpars. (G) and (H). 1998—Subsec. (a). Pub. L. 105–276, § 601(a), inserted heading and amended text generally, substituting present provisions for provisions which authorized mortgagee of foreclosed property to receive insurance benefit upon conveyance to Secretary of title and as- signment of claims, or upon foreclosure sale or ap- proved sale after default where at least fair market value was received, set maintenance of property as con- dition of receipt of benefit, provided that obligation to pay premium would cease upon conveyance and assign- ment and debentures would issue having par value equal to value of mortgage, and set forth provisions de- tailing amounts to be included in debentures or cash payment and provisions authorizing extension or modi- fication of mortgage where default was due to cir- cumstances beyond control of mortgagor. Subsec. (g). Pub. L. 105–276, § 601(d), inserted at end ‘‘The Secretary may sell real and personal property ac- quired by the Secretary pursuant to the provisions of this chapter on such terms and conditions as the Sec- retary may prescribe.’’ Subsecs. (h), (i). Pub. L. 105–276, § 602, added subsec. (h) and redesignated former subsec. (h) as (i). Subsec. (k). Pub. L. 105–276, § 601(c), struck out subsec. (k) which read as follows: ‘‘Notwithstanding any other provision of this section or of section 1739 or 1750c of this title and with respect to any debentures issued in exchange for properties conveyed to and accepted by the Secretary after September 23, 1959 in accordance with such sections, the Secretary may (1) include in de- bentures reasonable payments made by the mortgagee with the approval of the Secretary for the purpose of protecting, operating, or preserving the property, and taxes imposed upon any deed or any other instrument by which the property was acquired by the mortgagee and transferred or conveyed to the Secretary; (2) in- clude in debentures as a portion of foreclosure costs (to the extent that foreclosure costs may be included in such debentures by any other provision of this chapter) payments made by the mortgagee for the cost of ac- quiring the property and conveying and evidencing title to the property to the Secretary; and (3) termi- nate the mortgagee’s obligation to pay mortgage insur- ance premiums upon receipt of an application for de- bentures filed by the mortgagee, or in the event the contract of insurance is terminated pursuant to section 1715t of this title.’’ 1996—Subsec. (a). Pub. L. 104–134, in penultimate pro- viso of last sentence, substituted ‘‘special forebearance’’ for ‘‘special foreclosure’’. Pub. L. 104–99 inserted ‘‘: And provided further, That the Secretary may pay insurance benefits to the mort- gagee to recompense the mortgagee for its actions to provide an alternative to the foreclosure of a mortgage that is in default, which actions may include special foreclosure, loan modification, and deeds in lieu of fore- closure, all upon terms and conditions as the mort- gagee shall determine in the mortgagee’s sole discre- tion, within guidelines provided by the Secretary, but which may not include assignment of a mortgage to the Secretary: And provided further, That for purposes of the preceding proviso, no action authorized by the Sec- retary and no action taken, nor any failure to act, by the Secretary or the mortgagee shall be subject to judi- cial review.’’ before period at end of last sentence. 1992—Subsec. (a). Pub. L. 102–550, § 516(a)(1), in fifth sentence, substituted ‘‘issue to the mortgagee deben- tures having a par value’’ for ‘‘, subject to the cash ad- justment hereinafter provided, issue to the mortgagee debentures having a total face value’’. Subsec. (c). Pub. L. 102–550, § 516(a)(2), added subsec. (c) and struck out former subsec. (c) which read as fol- lows: ‘‘Debentures issued under this section shall be in such form and denominations in multiples of $50, shall be subject to such terms and conditions, and shall in- clude such provisions for redemption, if any, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $350, shall be adjusted by the payment of cash by the Secretary to the mortgagee from the Mutual Mortgage Insurance Fund.’’ Subsec. (d). Pub. L. 102–550, § 516(a)(3), (4), in first sen- tence, substituted ‘‘issued in the name of’’ for ‘‘exe- cuted in the name of’’ and ‘‘and shall be negotiable, and, if in book entry form, transferable, in the manner described by the Secretary in regulations’’ for ‘‘, shall be signed by the Secretary by either his written or en- graved signature, and shall be negotiable’’ and in fifth sentence, substituted ‘‘and, in the case of debentures issued in certificated registered form, such guaranty’’ for ‘‘and such guaranty’’. 1989—Subsec. (a). Pub. L. 101–235, § 136(a), inserted after third sentence ‘‘As a condition of the receipt of such benefits, the mortgagee shall maintain or assure the maintenance of the mortgaged property (in such manner as the Secretary shall by regulation provide) during the period beginning on the taking of the pos- session or other acquisition of the mortgaged property Page 568 TITLE 12—BANKS AND BANKING § 1710 by the mortgagee and ending on conveyance to the Sec- retary or other disposition of the mortgaged property in accordance with this section, and funds expended by the mortgagee in meeting such obligation shall be in- cluded, to the extent provided in this subsection or in subsection (k) of this section, in debentures or other in- surance payment pursuant to this section.’’ Subsec. (g). Pub. L. 101–235, § 136(b), inserted after first sentence ‘‘The Secretary shall, by regulation, carry out a program of sales of such properties and shall develop and implement appropriate credit terms and standards to be used in carrying out the program.’’ 1988—Subsec. (a). Pub. L. 100–628, § 1064(a)(1), (2), in second sentence, substituted ‘‘(1)(A) upon sale’’ for ‘‘(1) upon sale’’, inserted cl. (B), and substituted ‘‘; and (2)’’ for ‘‘, and (2)’’. Pub. L. 100–628, § 1064(b)(1), in third sentence, sub- stituted ‘‘November 30, 1983 (on or after November 7, 1988, with respect to the payment of benefits under clause (1)(B) of the preceding sentence),’’ for ‘‘the effec- tive date of this sentence’’. Pub. L. 100–628, § 1064(b)(2)(A), in fifth sentence, struck out ‘‘foreclosure’’ before ‘‘sale of the property: Provided’’. Subsec. (j). Pub. L. 100–628, § 1064(b)(2)(B), inserted ‘‘clause (1)(A) of’’ before ‘‘the second sentence’’. Subsec. (l). Pub. L. 100–242 added subsec. (l). 1983—Subsec. (a). Pub. L. 98–181, § 426(a), inserted pro- vision authorizing the Secretary to make the benefit of the insurance available to the mortgagee upon sale of the insured property at foreclosure and assignment of all claims to the Secretary and provision relating to payment of benefits pursuant to a commitment to in- sure issued on or after the effective date of this sen- tence [Nov. 30, 1983], and substituted ‘‘any amount re- ceived as rent or other income from the property, less reasonable expenses incurred in handling the property, after either of such dates, and, in the case of insurance benefits paid in accordance with the second sentence of this section, any amount received upon the foreclosure sale of the property’’ for ‘‘and any amount received as rent or other income from the property, less reasonable expenses incurred in handling the property, after either of such dates’’. Subsec. (j). Pub. L. 98–181, § 426(b), inserted ‘‘(other than a mortgagee receiving insurance benefits under the second sentence of subsection (a))’’ after ‘‘section 1709 of this title’’. 1967—Pub. L. 90–19, § 1(a)(2), substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘Federal Housing Commissioner’’ in subsec. (g). Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a) to (d), (e)(1), (f)(1), (f)(1)(i), (ii), (f)(2), (3), (g), (h), (j), and (k). Subsec. (f)(3). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Sec- retary’s’’ for ‘‘Commissioner’s’’ wherever appearing. Subsec. (g). Pub. L. 90–19, § 1(d), substituted ‘‘an offi- cer’’ for ‘‘the Commissioner or by any Assistant Com- missioner’’. 1965—Subsec. (a). Pub. L. 89–117, § 1108(d)(1), struck out reference to section 1715a of this title after ref- erence to section 1709 of this title in first sentence. Subsec. (c). Pub. L. 89–117, § 1108(d)(2), substituted ‘‘Mutual Mortgage Insurance Fund’’ for ‘‘Fund as to mortgages insured under section 1709 of this title and from the Housing Fund as to mortgages insured under section 1715a of this title’’. Subsec. (d). Pub. L. 89–117, § 1108(d)(3)–(6), removed all references to debentures issued with respect to mort- gages insured under section 1715a of this title and to the Housing Insurance Fund and substituted Mutual Mortgage Insurance Fund for Fund wherever appearing. Subsec. (f). Pub. L. 89–117, § 1108(d)(7), struck out pro- vision of subpar. (1)(i) calling for retention of excess by Commissioner and credit to the Housing Insurance Fund in the case of mortgages insured under section 1713 of this title. 1964—Subsec. (a). Pub. L. 88–560, §§ 104(a), 105(a)(1)–(3), (6)(B), amended provisions as follows; section 104(a), in proviso reading ‘‘And provided further, That with re- spect to any mortgage covering a one-, two-, three-, or four-family residence’’, struck out ‘‘and it is probable that the mortgage will be restored to good standing within a reasonable period of time’’ after ‘‘control of the mortgagor’’, substituted ‘‘upon such terms and con- ditions’’ for ‘‘under such regulations and conditions’’, incorporated authority of Commissioner to ‘‘extend the time for curing default and enter into an agreement with the mortgage providing that if the mortgage is subsequently foreclosed, any interest accruing after the date of the agreement which is not paid by the mort- gagor may be included in the debentures’’ in cl. (1), and provided for remainder of cl. (1), cl. (2) and consider- ation of the principal amount of the mortgage, as modi- fied, as the ‘‘original principal obligation of the mort- gage’’ for purpose of computing total face value of de- bentures to be issued or cash payment to be made by Commissioner to a mortgagee; section 105(a)(1) sub- stituted in third sentence ‘‘charges for the administra- tion, operation, maintenance and repair of community- owned property or the maintenance and repair of the mortgaged property, the obligation for which arises out of a covenant filed for record and approved by the Com- missioner prior to the insurance of the mortgage, in- surance on the mortgaged property, and any mortgage insurance premiums’’ for ‘‘insurance on the mortgaged property, and any mortgage insurance premiums paid after either of such dates’’; section 105(a)(2) inserted provisos reading ‘‘And provided further, That with re- spect to a mortgage accepted for insurance pursuant to a commitment issued on or after September 2, 1964, the Commissioner may include in debentures or in the cash payment on amount not to exceed the foreclosure, ac- quisition, and conveyance costs actually paid by the mortgagee and approved by the Commissioner’’ and ‘‘And provided further, That with respect to a mortgage accepted for insurance pursuant to a commitment issued prior to September 2, 1964, the Commissioner may, with the consent of the mortgagee (in lieu of issuing a certificate of claim as provided in subsection (e)), included in debentures or in the cash payment, in addition to amounts otherwise allowed for such costs, an amount not to exceed one-third of the total fore- closure, acquisition, and conveyance costs actually paid by the mortgagee and approved by the Commis- sioner, but in no event may the total allowance for such costs exceed the amount actually paid by the mortgagee:’’; section 105(a)(3) struck out from proviso reading ‘‘And provided further, That with respect to mortgages to which the provisions of sections 532 and 536 of Appendix To Title 50 apply’’ the words ‘‘and the payment of insurance premiums’’ after ‘‘on account of interest on debentures’’ and inserted after such proviso ‘‘And provided further, That where the claim is paid in cash there shall be included in the cash payment an amount equivalent to the compensation for loss of de- benture interest that would be included in computing debentures if such claim were being paid in deben- tures’’; and section 105(a)(6)(B) substituted ‘‘and (sub- ject to subsection (e)(2) of this section) a certificate of claim’’ for ‘‘and a certificate of claim’’ in second sen- tence. Subsec. (c). Pub. L. 88–560, § 105(a)(4), increased limi- tation on the difference between the value of the mort- gage and the aggregate face value of the debentures issued from $50 to $350. Subsec. (d). Pub. L. 88–560, § 105(a)(5), substituted ‘‘: Provided, That debentures issued pursuant to claims for insurance filed on or after September 2, 1964 shall be dated as of the date of default or as of such later date as the Commissioner, in his discretion, may establish by regulation. The debentures’’ for ‘‘, except that de- bentures issued pursuant to the provisions of section 1715k(f), 1715l(g), and 1715x of this title may be dated as of the date the mortgage is assigned (or the property is conveyed) to the Commissioner, and’’ in second sen- tence. Subsec. (e). Pub. L. 88–560, § 105(a)(6)(A), designated existing provisions as par. (1), substituted ‘‘Subject to Page 569 TITLE 12—BANKS AND BANKING § 1710 paragraph (2), the certificate’’ for ‘‘The certificate’’, and added par. (2). Subsec. (f). Pub. L. 88–560, § 105(a)(7)–(11), designated introductory par. as par. (1) and substituted ‘‘If, after deducting (in such manner and amount as the Commis- sioner shall determine to be equitable and in accord- ance with sound accounting practice) the expenses in- curred by the Commissioner, the net amount realized from any property conveyed to the Commissioner under this section and the claims assigned therewith exceed the face value’’ for ‘‘If the net amount realized from any property conveyed to the Commissioner under this section and the claims assigned therewith, after de- ducting all expenses incurred by the Commissioner in handling, dealing with, and disposing of such property and in collecting such claims, exceeds the face value’’; redesignated former par. (1) as (i) and inserted proviso; redesignated former par. (2) as (ii); designated con- cluding par. as par. (2) and inserted proviso; and added par. (3), respectively. 1961—Subsec. (d). Pub. L. 87–70, § 612(b), permitted de- bentures issued pursuant to provisions of section 1715k(f), 1715l(g), and 1715x of this title to be dated as of the date the mortgage is assigned (or the property is conveyed) to the Commissioner. Subsec. (g). Pub. L. 87–70, § 612(c), included instru- ments relating to personal property, and inserted pro- viso requiring that a conveyance or transfer of title to real or personal property or an interest therein to the Federal Housing Commissioner, his successors and as- signs, without identifying the Commissioner therein, shall be deemed a proper conveyance or transfer. 1959—Subsec. (a). Pub. L. 86–372, § 114(b), authorized the Commissioner, with respect to any mortgage cov- ering a one-, two-, three-, or four-family residence in- sured under this chapter, if he finds after notice of de- fault, that the default was due to circumstances beyond the control of the mortgagor and it is probable that the mortgage will be restored to good standing within a reasonable period of time, to extend the time for curing default and to enter into an agreement with the mort- gagee providing that if the mortgage is subsequently foreclosed, any interest accruing after the date of the agreement which is not paid by the mortgagor may be included in the debentures. Subsec. (k). Pub. L. 86–372, § 117, substituted ‘‘and with respect to any debentures issued in exchange for properties conveyed to and accepted by the Commis- sioner after September 23, 1959 in accordance with such section’’ for ‘‘with respect to any debentures issued pursuant to this section or section 1739 or 1750c of this title’’, and inserted provisions authorizing inclusion as a portion of the foreclosure costs payments made by the mortgagee for the cost of acquiring the property and conveying the evidencing title to the property to the Commissioner, and permitting the termination of the mortgagee’s obligation to pay mortgage insurance premiums in the event the contract of insurance is ter- minated pursuant to section 1715t of this title. 1957—Subsec. (d). Pub. L. 85–104, § 108(a), substituted ‘‘established by the Commissioner pursuant to section 1715o of this title’’ for ‘‘determined by the Commis- sioner, with the approval of the Secretary of the Treas- ury, at the time the mortgage was offered for insur- ance, but not to exceed 3 per centum per annum’’ in second sentence. Subsec. (k). Pub. L. 85–104, § 107, added subsec. (k). 1955—Subsec. (f). Act Aug. 11, 1955, authorized the Commissioner to effect the settlement of certificates of claim and refunds to mortgagors. 1954—Subsec. (a). Act Aug. 2, 1954, § 111(l), permitted a mortgagee to receive in debentures amounts paid by it for Federal taxes imposed on a deed to it and on a deed to the Commissioner; (2) substituted, in second proviso, ‘‘or under section 1715e of this title, or with respect to any mortgage accepted for insurance under section 1709 of this title on or after August 2, 1954,’’ for ‘‘or under section 1715e of this title’’; and (3) inserted proviso per- mitting direct conveyances to the Commissioner. Subsec. (d). Act Aug. 2, 1954, § 112(a), substituted pro- vision for a straight 20-year maturity on debentures for former provision that the debentures should mature ‘‘three years after the 1st day of July following the ma- turity date of the mortgage on the property in ex- change for which the debentures were issued, except that debentures issued with respect to mortgages in- sured under section 1715e of this title shall mature twenty years after the date of such debentures’’ in sec- ond sentence. Subsec. (j). Act Aug. 2, 1954, § 113, added subsec. (j). 1951—Subsec. (d). Sept. 1, 1951, inserted in second sen- tence the provision that debentures issued with respect to mortgages insured under section 1715e of this title shall mature twenty years after the date of such deben- tures. 1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commis- sioner’’ for ‘‘Administrator’’ wherever appearing. Subsec. (a). Act Apr. 20, 1950, § 105, inserted ‘‘or under section 1715e of this title’’ in second proviso. 1948—Subsec. (a). Act Aug. 10, 1948, § 101(l)(1), (2), struck out ‘‘prior to July 1, 1944’’ in first proviso and inserted second proviso. Subsec. (f). Act Aug. 10, 1948, § 101(q), inserted ‘‘if the mortgage was insured under section 1709 of this title and shall be retained by the Administrator and credited to the Housing Insurance Fund if the mortgage was in- sured under section 1713 of this title’’ before the colon in par. (1). 1943—Subsec. (a). Act Oct. 14, 1943, inserted proviso. 1941—Subsec. (a). Act June 28, 1941, substituted ‘‘July 1, 1944’’ for ‘‘July 1, 1941’’ in last sentence. 1939—Subsec. (a). Act June 3, 1939, § 9, amended last sentence generally. Subsec. (g). Act June 3, 1939, § 10, inserted last sen- tence. 1938—Subsecs. (a) to (f). Act Feb. 3, 1938, amended provisions generally. Subsecs. (g), (h). Act Feb. 3, 1938, added subsecs. (g) and (h). 1937—Subsec. (b). Act Joint Res. Feb. 19, 1937, sub- stituted ‘‘July 1, 1939’’ for ‘‘July 1, 1937’’. 1935—Subsec. (a). Act May 28, 1935, amended last sen- tence generally. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–276, title VI, § 601(b), Oct. 21, 1998, 112 Stat. 2673, provided that: ‘‘The Secretary shall publish a no- tice in the Federal Register stating the effective date of the terms and conditions prescribed by the Secretary under section 204(a)(1) of the National Housing Act [12 U.S.C. 1710(a)(1)], as amended by subsection (a) of this section. Subsections (a) and (k) of section 204 of the Na- tional Housing Act [12 U.S.C. 1710(a), (k)], as in effect immediately before such effective date, shall continue to apply to any mortgage insured under section 203 of the National Housing Act [12 U.S.C. 1709] before such effective date, except that the Secretary may, at the request of the mortgagee, pay insurance benefits as provided in subparagraphs (A) and (D) of section 204(a)(1) of such Act [12 U.S.C. 1710(a)(1)(A), (D)] to cal- culate insurance benefits in accordance with section 204(a)(5) of such Act [12 U.S.C. 1710(a)(5)].’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–99, title IV, § 407(c), Jan. 26, 1996, 110 Stat. 46, as amended by Pub. L. 104–134, title I, § 101(e) [title II, § 221(d)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; re- numbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 104–204, title II, § 203, Sept. 26, 1996, 110 Stat. 2894; Pub. L. 105–33, title II, § 2002(1), Aug. 5, 1997, 111 Stat. 257, provided that: ‘‘Except as provided in subsection (e) [110 Stat. 46, repealed by Pub. L. 105–33, § 2002(2)], the amendments made by subsections (a) and (b) [amending this section and section 1715u of this title] shall apply with respect to mortgages insured under the National Housing Act [12 U.S.C. 1701 et seq.] that are executed before, on, or after October 1, 1997.’’ EFFECTIVE DATE OF 1954 AMENDMENT Act Aug. 2, 1954, ch. 649, title I, § 112(e), 68 Stat. 593, provided that: ‘‘This section [amending this section and Page 570 TITLE 12—BANKS AND BANKING § 1711 sections 1713, 1748b, and 1750c of this title] shall not apply in any case where the mortgage involved was in- sured or the commitment for such insurance was issued prior to the effective date of the Housing Act of 1954 [Aug. 2, 1954].’’ REGULATIONS Pub. L. 104–134, title I, § 101(e) [title II, § 221(c)(1)], Apr. 26, 1996, 110 Stat. 1321–291, provided that: ‘‘Not later than 30 days after the date of enactment of this Act [Apr. 26, 1996], the Secretary of Housing and Urban Development shall issue interim regulations to imple- ment section 407 of the Balanced Budget Downpayment Act, I [Pub. L. 104–99, amending this section and sec- tion 1715u of this title and enacting provisions set out as a note above], and the amendments to the National Housing Act made by that section.’’ Pub. L. 104–99, title IV, § 407(d), Jan. 26, 1996, 110 Stat. 46, which directed the Secretary of Housing and Urban Development to issue interim regulations to implement section 407 of Pub. L. 104–99 and amendments made by that section (amending this section and section 1715u of this title and enacting provisions set out as a note above) not later than 60 days after Jan. 26, 1996, was re- pealed by Pub. L. 104–134, title I, § 101(e) [title II, § 221(c)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; re- numbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327. Pub. L. 100–628, title X, § 1064(c), Nov. 7, 1988, 102 Stat. 3275, provided that: ‘‘In developing regulations to carry out the amendments made by this section [amending this section], the Secretary of Housing and Urban De- velopment may delegate to mortgagees the authority to make determinations on behalf of the Secretary, and the Secretary shall rely on certifications and post audit reviews to the greatest extent possible.’’ HOMEOWNERSHIP PRESERVATION Pub. L. 110–289, div. B, title I, § 2125, July 30, 2008, 122 Stat. 2840, provided that: ‘‘The Secretary of Housing and Urban Development and the Commissioner of the Federal Housing Administration, in consultation with industry, the Neighborhood Reinvestment Corporation, and other entities involved in foreclosure prevention activities, shall— ‘‘(1) develop and implement a plan to improve the Federal Housing Administration’s loss mitigation process; and ‘‘(2) report such plan to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.’’ ASSET CONTROL AREA DEMONSTRATION PROGRAM AGREEMENTS, CONTRACTS, AND REGULATIONS Pub. L. 107–206, title I, § 1303, Aug. 2, 2002, 116 Stat. 897, provided that: ‘‘The Secretary of Housing and Urban Development shall begin to enter into new agreements and contracts pursuant to the Asset Con- trol Area Demonstration Program as provided in sec- tion 602 of Public Law 105–276 [amending this section] not later than September 15, 2002: Provided, That any agreement or contract entered into pursuant to such program shall be consistent with the requirements of such section 602: Provided further, That the Department shall develop proposed regulations for this program not later than September 15, 2002.’’ TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS Pub. L. 106–554, § 1(a)(7) [title I, § 142], Dec. 21, 2000, 114 Stat. 2763, 2763A–618, provided that: ‘‘In carrying out the program under section 204(h) of the National Hous- ing Act (12 U.S.C. 1710(h)), upon the request of the chief executive officer of a county or the government of ap- propriate jurisdiction and not later than 60 days after such request is made, the Secretary of Housing and Urban Development shall designate as a revitalization area all portions of such county that meet the criteria for such designation under paragraph (3) of such sec- tion.’’ SETTLEMENT COSTS IN THE FINANCING OF FEDERAL HOUSING ADMINISTRATION AND VETERANS’ ADMINIS- TRATION ASSISTED HOUSING; STUDY AND REC- OMMENDATIONS TO CONGRESS ON REDUCTION AND STANDARDIZATION OF COSTS Pub. L. 91–351, title VII, § 701, July 24, 1970, 84 Stat. 461, provided that: ‘‘(a) With respect to housing built, rehabilitated, or sold with assistance provided under the National Hous- ing Act [this chapter] or under chapter 37 of title 38, United States Code, the Secretary of Housing and Urban Development and the Administrator of Veterans’ Affairs are respectively authorized and directed to pre- scribe standards governing the amounts of settlement costs allowable in connection with the financing of such housing in any such area. Such standards shall— ‘‘(1) be established after consultation between the Secretary and the Administrator; ‘‘(2) be consistent in any area for housing assisted under the National Housing Act and housing assisted under chapter 37 of title 38, United States Code; and ‘‘(3) be based on the Secretary’s and the Adminis- trator’s estimates of the reasonable charge for nec- essary services involved in settlements for particular classes of mortgages and loans. ‘‘(b) The Secretary and the Administrator shall un- dertake a joint study and make recommendations to the Congress not later than one year after the date of enactment of this Act [July 24, 1970] with respect to legislative and administrative actions which should be taken to reduce mortgage settlement costs and to standardize these costs for all geographic areas.’’ § 1711. General Surplus and Participating Re- serve Accounts (a) Establishment; abolishment of General Rein- surance Account The Secretary shall establish as of July 1, 1954, in the Mutual Mortgage Insurance Fund a Gen- eral Surplus Account and a Participating Re- serve Account. All of the assets of the General Reinsurance Account shall be transferred to the General Surplus Account whereupon the General Reinsurance Account shall be abolished. There shall be transferred from the various group ac- counts to the Participating Reserve Account as of July 1, 1954, an amount equal to the aggregate amount which would have been distributed under the provisions of this section in effect on June 30, 1954, if all outstanding mortgages in such group accounts had been paid in full on said date. All of the remaining balances of said group accounts shall as of said date be trans- ferred to the General Surplus Account where- upon all of said group accounts shall be abol- ished. (b) Credits and charges The aggregate net income thereafter received or any net loss thereafter sustained by the Mu- tual Mortgage Insurance Fund in any semi- annual period shall be credited or charged to the General Surplus Account and/or the Partici- pating Reserve Account in such manner and amounts as the Secretary may determine to be in accord with sound actuarial and accounting practice. (c) Distribution of funds to terminating mortga- gors Upon termination of the insurance obligation of the Mutual Mortgage Insurance Fund by pay-