42 U.S.C. § 1472 — Loans for housing and buildings on ade-

Page 4745 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 grams of the Farmers Home Administration in order to measure progress towards meeting the objectives of na- tional housing policy. ‘‘(2) FORM OF GOALS.—The performance goals referred to in paragraph (1) shall be expressed in terms suffi- cient to measure progress. ‘‘(3) REPORT.—The Secretary of Agriculture shall pre- pare a report to the Congress on the progress made in attaining the performance goals for each program, cit- ing the actual results achieved in such program for the previous year. ‘‘(4) FAILURE TO MEET GOALS.—If a performance stand- ard or goal has not been met, the report under para- graph (3) shall include an explanation of why the goal was not met, propose plans for achieving the perform- ance goal, and recommend any legislative or regulatory changes necessary for achievement of the goal.’’ [For termination, effective May 15, 2000, of provisions of law requiring submittal to Congress of any annual, semiannual, or other regular periodic report listed in House Document No. 103–7 (in which a report required under section 925(b)(3) of Pub. L. 102–550, set out above, is listed in item 12 on page 47), see section 3003 of Pub. L. 104–66, as amended, set out as a note under section 1113 of Title 31, Money and Finance.] Executive Documents TERMINATION OF TRUST TERRITORY OF THE PACIFIC ISLANDS For termination of Trust Territory of the Pacific Is- lands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions. ADMISSION OF ALASKA AND HAWAII TO STATEHOOD Alaska was admitted into the Union on Jan. 3, 1959, on issuance of Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73 Stat. c16, and Hawaii was admitted into the Union on Aug. 21, 1959, on issuance of Proc. No. 3309, Aug. 21, 1959, 24 F.R. 6868, 73 Stat. c74. For Alaska Statehood Law, see Pub. L. 85–508, July 7, 1958, 72 Stat. 339, set out as a note preceding section 21 of Title 48, Territories and Insular Possessions. For Hawaii Statehood Law, see Pub. L. 86–3, Mar. 18, 1959, 73 Stat. 4, set out as a note preceding section 491 of Title 48. § 1472. Loans for housing and buildings on ade- quate farms (a) Terms of loan (1) If the Secretary determines that an appli- cant is eligible for assistance as provided in sec- tion 1471 of this title and that the applicant has the ability to repay in full the sum to be loaned, with interest, giving due consideration to the income and earning capacity of the applicant and his family from the farm and other sources, and the maintenance of a reasonable standard of living for the owner and the occupants of said farm, a loan may be made by the Secretary to said applicant for a period of not to exceed thir- ty-three years from the making of the loan with interest. The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant’s note to compensate for any deficiency in the applicant’s repayment ability. At the borrower’s option, the borrower may prepay to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 1471(e) of this title. (2) The Secretary may extend the period of any loan made under this section if the Sec- retary determines that such extension is nec- essary to permit the making of such loan to any person whose income does not exceed 60 per cen- tum of the median income for the area and who would otherwise be denied such loan because the payments required under a shorter period would exceed the financial capacity of such person. The aggregate period for which any loan may be extended under this paragraph may not exceed 5 years. (3)(A) Notwithstanding any other provision of this subchapter, a loan may be made under this section for the purchase of a dwelling located on land owned by a community land trust, if the borrower and the loan otherwise meet the re- quirements applicable to loans under this sec- tion. (B) For purposes of this paragraph, the term ‘‘community land trust’’ means a community housing development organization as such term is defined in section 12704 of this title (except that the requirements under section 12704(6)(C) of this title and section 12704(6)(D) of this title shall not apply for purposes of this paragraph)— (i) that is not sponsored by a for-profit orga- nization; (ii) that is established to carry out the ac- tivities under clause (iii); (iii) that— (I) acquires parcels of land, held in per- petuity, primarily for conveyance under long-term ground leases; (II) transfers ownership of any structural improvements located on such leased parcels to the lessees; and (III) retains a preemptive option to pur- chase any such structural improvement at a price determined by formula that is designed to ensure that the improvement remains af- fordable to low- and moderate-income fami- lies in perpetuity; and (iv) that has its corporate membership open to any adult resident of a particular geo- graphic area specified in the bylaws of the or- ganization. (b) Provisions of loan instrument The instruments under which the loan is made and the security given shall— (1) provide for security upon the applicant’s equity in the farm or such other security or collateral, if any, as may be found necessary by the Secretary reasonably to assure repay- ment of the indebtedness; (2) provide for the repayment of principal and interest in accordance with schedules and repayment plans prescribed by the Secretary, except that any prepayment of a loan made or insured under section 1484 or 1485 of this title shall be subject to the provisions of subsection (c); (3) except for guaranteed loans, contain the agreement of the borrower that he will, at the request of the Secretary, proceed with dili- gence to refinance the balance of the indebted- ness through cooperative or other responsible private credit sources whenever the Secretary determines, in the light of the borrower’s cir- cumstances, including his earning capacity and the income from the farm, that he is able to do so upon reasonable terms and conditions; (4) be in such form and contain such cov- enants as the Secretary shall prescribe to se- Page 4746 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 1 See References in Text note below. cure the payment of the loan with interest, protect the security, and assure that the farm will be maintained in repair and that waste and exhaustion of the farm will be prevented. (c) Prepayment and refinancing provisions (1)(A) The Secretary may not accept an offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any loan made or in- sured under section 1484 or 1485 of this title pur- suant to a contract entered into after December 21, 1979, but before December 15, 1989, unless the Secretary takes appropriate action which will obligate the borrower (and successors in interest thereof) to utilize the assisted housing and re- lated facilities for the purposes specified in sec- tion 1484 or 1485 of this title, as the case may be, for a period of— (i) fifteen years from the date on which the loan was made in the case of a loan made or insured pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, and utilized for housing and related facilities which have not received assistance under section 1490a(a)(1)(B), (a)(2), or (5) of this title or section 1437f of this title; or (ii) twenty years from the date on which the loan was made in the case of any other such loan; or until the Secretary determines (prior to the end of such period) that there is no longer a need for such housing and related facilities to be so utilized or that Federal or other financial assist- ance provided to the residents of such housing will no longer be provided. (B) The Secretary may not accept an offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any initial loan made or insured under section 1485 of this title pursu- ant to a contract entered into on or after De- cember 15, 1989. (2) If any loan which was made or insured under section 1484 or 1485 of this title pursuant to a contract entered into prior to December 15, 1989, is prepaid or refinanced on or after October 8, 1980, and tenants of the housing and related facilities financed with such loan are displaced due to a change in the use of the housing, or to an increase in rental or other charges, as a re- sult of such prepayment or refinancing, the Sec- retary shall provide such tenants a priority for relocation in alternative housing assisted pursu- ant to this subchapter. (3) NOTICE OF OFFER TO PREPAY.—Not less than 30 days after receiving an offer to prepay any loan made or insured under section 1484 or 1485 of this title, the Secretary shall provide written notice of the offer or request to the tenants of the housing and related facilities involved, to interested nonprofit organizations, and to any appropriate State and local agencies. (4)(A) AGREEMENT BY BORROWER TO EXTEND LOW INCOME USE.—Before accepting any offer to pre- pay, or requesting refinancing in accordance with subsection (b)(3) of, any loan made or in- sured under section 1484 or 1485 of this title pur- suant to a contract entered into prior to Decem- ber 15, 1989, the Secretary shall make reasonable efforts to enter into an agreement with the bor- rower under which the borrower will make a binding commitment to extend the low income use of the assisted housing and related facilities involved for not less than the 20-year period be- ginning on the date on which the agreement is executed. (B) ASSISTANCE AVAILABLE TO BORROWER TO EX- TEND LOW INCOME USE.—To the extent of amounts provided in appropriation Acts, the agreement under subparagraph (A) may provide for 1 or more of the following forms of assist- ance that the Secretary, after taking into ac- count local market conditions, determines to be necessary to extend the low income use of the housing and related facilities involved: (i) Increase in the rate of return on invest- ment. (ii) Reduction of the interest rate on the loan through the provision of interest credits under section 1490a(a)(1)(B) of this title, or ad- ditional assistance or an increase in assistance provided under section 1490a(a)(5) of this title. (iii) Additional rental assistance, or an in- crease in assistance provided under existing contracts, under section 1490a(a)(2) or 1490a(a)(5) of this title or under section 1437f of this title. (iv) An equity loan to the borrower under paragraphs (1) and (2) of section 1485(c) of this title or under paragraphs (1) and (2) of section 1484(j) 1 of this title, except that an equity loan referred to in this clause may not be made available after August 6, 1996, unless the Sec- retary determines that the other incentives available under this subparagraph are not ade- quate to provide a fair return on the invest- ment of the borrower, to prevent prepayment of the loan insured under section 1484 or 1485 of this title, or to prevent the displacement of tenants of the housing for which the loan was made. (v) Incremental rental assistance in connec- tion with loans under clauses (ii) and (iv) to the extent necessary to avoid increases in the rental payments of current tenants not receiv- ing rental assistance under section 1490a(a)(2) of this title or under section 1437f of this title, or current tenants of projects not assisted under section 1490a(a)(5) of this title. (vi) In the case of a project that has received rental assistance under section 1437f of this title, permitting the owner to receive rent in excess of the amount determined necessary by the Secretary to defray the cost of long-term repair or maintenance of such a project. (C) APPROVAL OF ASSISTANCE.—The Secretary may approve assistance under subparagraph (B) for assisted housing only if the restrictive pe- riod has expired for any loan for the housing made or insured under section 1484 or 1485 of this title pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, and the Secretary determines that the combina- tion of assistance provided— (i) is necessary to provide a fair return on the investment of the borrower; and (ii) is the least costly alternative for the Federal Government that is consistent with carrying out the purposes of this subsection. (5)(A) OFFER TO SELL TO NONPROFIT ORGANIZA- TIONS AND PUBLIC AGENCIES.— Page 4747 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 (i) IN GENERAL.—If the Secretary determines after a reasonable period that an agreement will not be entered into with a borrower under paragraph (4), the Secretary shall require the borrower (except as provided in subparagraph (G)) to offer to sell the assisted housing and related facilities involved to any qualified nonprofit organization or public agency at a fair market value determined by 2 independent appraisers, one of whom shall be selected by the Secretary and one of whom shall be se- lected by the borrower. If the 2 appraisers fail to agree on the fair market value, the Sec- retary and the borrower shall jointly select a third appraiser, whose appraisal shall be bind- ing on the Secretary and the borrower. (ii) PERIOD FOR WHICH REQUIREMENT APPLICA- BLE.—If, upon the expiration of 180 days after an offer is made to sell housing and related fa- cilities under clause (i), no qualified nonprofit organization or public agency has made a bona fide offer to purchase, the Secretary may ac- cept the offer to prepay, or may request refi- nancing in accordance with subsection (b)(3) of, the loan. This clause shall apply only when funds are available for purposes of carrying out a transfer under this paragraph. (B) QUALIFIED NONPROFIT ORGANIZATIONS AND PUBLIC AGENCIES.— (i) LOCAL NONPROFIT ORGANIZATION OR PUBLIC AGENCY.—A local nonprofit organization or public agency may purchase housing and re- lated facilities under this paragraph only if— (I) the organization or agency is deter- mined by the Secretary to be capable of managing the housing and related facilities (either directly or through a contract) for the remaining useful life of the housing and related facilities; and (II) the organization or agency has entered into an agreement that obligates it (and suc- cessors in interest thereof) to maintain the housing and related facilities as affordable for very low-income families or persons and low income families or persons for the re- maining useful life of the housing and re- lated facilities. (ii) NATIONAL OR REGIONAL NONPROFIT ORGA- NIZATION.—If the Secretary determines that there is no local nonprofit organization or public agency qualified to purchase the hous- ing and related facilities involved, the Sec- retary shall require the borrower to offer to sell the assisted housing and related facilities to an existing qualified national or regional nonprofit organization. (iii) SELECTION OF QUALIFIED PURCHASER.— The Secretary shall promulgate regulations that establish criteria for selecting a qualified nonprofit organization or public agency to purchase housing and related facilities when more than 1 such organization or agency has made a bona fide offer. Such regulations shall give a priority to those organizations or agen- cies with the greatest experience in developing or managing low income housing or commu- nity development projects and with the long- est record of service to the community. (C) FINANCING OF SALE.—To facilitate the sale described in subparagraph (A), the Secretary shall— (i) to the extent provided in appropriation Acts, make an advance to the nonprofit orga- nization or public agency whose offer to pur- chase is accepted under this paragraph to cover any direct costs (other than the pur- chase price) incurred by the organization or agency in purchasing and assuming responsi- bility for the housing and related facilities in- volved; (ii) approve the assumption, by the nonprofit organization or public agency involved, of the loan made or insured under section 1484 or 1485 of this title; (iii) to the extent provided in appropriation Acts, transfer any rental assistance payments that are received under section 1490a(a)(2)(A) of this title or under section 1437f of this title, or any assistance payments received under section 1490a(a)(5) of this title, with respect to the housing and related facilities involved; and (iv) to the extent provided in appropriation Acts, provide a loan under section 1485(c)(3) of this title to the nonprofit organization or pub- lic agency whose offer to purchase is accepted under this paragraph to enable the organiza- tion or agency to purchase the housing and re- lated facilities involved. (D) RENT LIMITATION AND ASSISTANCE.—The Secretary shall, to the extent provided in appro- priation Acts, provide to each nonprofit organi- zation or public agency purchasing housing and related facilities under this paragraph financial assistance (in the form of monthly payments or forgiveness of debt) in an amount necessary to ensure that the monthly rent payment made by each low income family or person residing in the housing does not exceed the maximum rent per- mitted under section 1490a(a)(2)(A) of this title or, in the case of housing assisted under section 1490a(a)(5) of this title, does not exceed the rents established for the project under such section. (E) RESTRICTION ON SUBSEQUENT TRANSFERS.— Except as provided in subparagraph (B)(ii), the Secretary may not approve the transfer of any housing and related facilities purchased under this paragraph during the remaining useful life of the housing and related facilities, unless the Secretary determines that— (i) the transfer will further the provision of housing and related facilities for low income families or persons; or (ii) there is no longer a need for such hous- ing and related facilities by low income fami- lies or persons. (F) GENERAL RESTRICTION ON PREPAYMENTS AND REFINANCINGS.—Following the transfer of the maximum number of dwelling units set forth in subparagraph (H)(i) in any fiscal year or the maximum number of dwelling units for which budget authority is available in any fiscal year, the Secretary may not accept in such fiscal year any offer to prepay, or request refinancing in ac- cordance with subsection (b)(3) of, any loan made or insured under section 1484 or 1485 of this title pursuant to a contract entered into prior to December 15, 1989, except in accordance with subparagraph (G). The limitation established in this subparagraph shall not apply to an offer to prepay, or request to refinance, if, following the Page 4748 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 date on which such offer or request is made (or following February 5, 1988, whichever occurs later) a 15-month period expires during which no budget authority is available to carry out this paragraph. For purposes of this subparagraph, the Secretary shall allocate budget authority under this paragraph in the order in which offers to prepay, or request to refinance, are made. (G) EXCEPTION.—This paragraph shall not apply to any offer to prepay, or any request to refinance in accordance with subsection (b)(3), any loan made or insured under section 1484 or 1485 of this title pursuant to a contract entered into prior to December 15, 1989, if— (i) the borrower enters into an agreement with the Secretary that obligates the borrower (and successors in interest thereof)— (I) to utilize the assisted housing and re- lated facilities for the purposes specified in section 1484 or 1485 of this title, as the case may be, for a period determined by the Sec- retary (but not less than the period de- scribed in paragraph (1)(B) calculated from the date on which the loan is made or in- sured); and (II) upon termination of the period de- scribed in paragraph (1)(B), to offer to sell the assisted housing and related facilities to a qualified nonprofit organization or public agency in accordance with this paragraph; or (ii) the Secretary determines that housing opportunities of minorities will not be materi- ally affected as a result of the prepayment or refinancing, and that— (I) the borrower (and any successor in in- terest thereof) are obligated to ensure that tenants of the housing and related facilities financed with the loan will not be displaced due to a change in the use of the housing, or to an increase in rental or other charges, as a result of the prepayment or refinancing; or (II) there is an adequate supply of safe, de- cent, and affordable rental housing within the market area of the housing and related facilities and sufficient actions have been taken to ensure that the rental housing will be made available to each tenant upon dis- placement. (H) FUNDING.— (i) BUDGET LIMITATION.—Not more than 5,000 dwelling units may be transferred under this paragraph in any fiscal year, and the budget authority that may be provided under this paragraph for any fiscal year may not exceed the amounts required to carry out this para- graph with respect to such number. (ii) REIMBURSEMENT OF RURAL HOUSING INSUR- ANCE FUND.—There are authorized to be appro- priated to the Rural Housing Insurance Fund such sums as may be necessary to reimburse the Fund for financial assistance provided under this paragraph, paragraph (4), and sec- tion 1487(j)(7) of this title. (I) DEFINITIONS.—For purposes of this para- graph: (i) LOCAL NONPROFIT ORGANIZATION.—The term ‘‘local nonprofit organization’’ means a nonprofit organization that— (I) has a broad based board reflecting var- ious interests in the community or trade area; and (II) is a not-for-profit charitable organiza- tion whose principal purposes include devel- oping or managing low income housing or community development projects. (ii) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means any private organization— (I) no part of the net earnings of which in- ures to the benefit of any member, founder, contributor, or individual; (II) that is approved by the Secretary as to financial responsibility; and (III) that does not have among its officers or directorate persons or parties with a ma- terial interest (or persons or parties related to any person or party with such an interest) in loans financed under section 1485 of this title that have been prepaid. (J) REGULATIONS.—Notwithstanding section 1490n of this title, the Secretary shall issue final regulations to carry out this paragraph not later than 60 days after February 5, 1988. The Sec- retary shall provide for the regulations to take effect not later than 45 days after the date on which the regulations are issued. (d) Dwelling units available to very low-income families or persons On and after November 30, 1983— (1) not less than 40 percent of the funds ap- proved in appropriation Acts for use under this section shall be set aside and made available only for very low-income families or persons; and (2) not less than 30 percent of the funds allo- cated to each State under this section shall be available only for very low-income families or persons. (e) Manufactured homes; qualifications for loans made or insured; energy conservation re- quirements (1) A loan which may be made or insured under this section with respect to housing shall be made or insured with respect to a manufactured home or with respect to a manufactured home and lot, whether such home or such home and lot is real property, personal property, or mixed real and personal property, if— (A) the manufactured home meets the stand- ards prescribed pursuant to title VI of the Housing and Community Development Act of 1974 [42 U.S.C. 5401 et seq.]; (B) the manufactured home, or the manufac- tured home and lot, meets the installation, structural, and site requirements which would apply under title II of the National Housing Act [12 U.S.C. 1707 et seq.]; and (C) the manufactured home meets the en- ergy conserving requirements established under paragraph (2), or until the energy con- serving requirements are established under paragraph (2), the manufactured home meets the energy conserving requirements applicable to housing other than manufactured housing financed under this subchapter. (2) Energy conserving requirements estab- lished by the Secretary for the purpose of para- graph (1)(C) shall— (A) reduce the operating costs for a borrower by maximizing the energy savings and be cost- Page 4749 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 effective over the life of the manufactured home or the term of the loan, whichever is shorter, taking into account variations in cli- mate, types of energy used, the cost to modify the home to meet such requirements, and the estimated value of the energy saved over the term of the mortgage; and (B) be established so that the increase in the annual loan payment resulting from the added energy conserving requirements in excess of those required by the standards prescribed under title VI of the Housing and Community Development Act of 1974 [42 U.S.C. 5401 et seq.] shall not exceed the projected savings in an- nual energy costs. (3) A loan that may be made or insured under this section with respect to a manufactured home on a permanent foundation, or a manufac- tured home on a permanent foundation and a lot, shall be repayable over the same period as would be applicable under section 203(b) of the National Housing Act [12 U.S.C. 1709(b)]. (f) Remote rural areas (1) Loan supplements The Secretary may supplement any loan under this section to finance housing located in a remote rural area or on tribal allotted or Indian trust land with a grant in an amount not greater than the amount by which the rea- sonable land acquisition and construction costs of the security property exceeds the ap- praised value of such property. (2) Prohibition The Secretary may not refuse to make, in- sure, or guarantee a loan that otherwise meets the requirements under this section solely on the basis that the housing involved is located in an area that is excessively rural in char- acter or excessively remote or on tribal allot- ted or Indian trust land. (g) Deferred mortgage demonstration (1) Authority With respect to families or persons other- wise eligible for assistance under subsection (d) but having incomes below the amount de- termined to qualify for a loan under this sec- tion, the Secretary may defer mortgage pay- ments beyond the amount affordable at 1 per- cent interest, taking into consideration in- come, taxes and insurance. Deferred mortgage payments shall be converted to payment sta- tus when the ability of the borrower to repay improves. Deferred amounts shall not exceed 25 percent of the amount of the payment due at 1 percent interest and shall be subject to re- capture. (2) Interest Interest on principal deferred shall be set at 1 percent and any interest payments deferred under this subsection shall not be treated as principal in calculating indebtedness. (3) Funding Subject to approval in appropriations Acts, not more than 10 percent of the amount ap- proved for each of fiscal years 1993 and 1994 for loans under this section may be used to carry out this subsection. (h) Doug Bereuter section 502 single family hous- ing loan guarantee program (1) Short title This subsection may be cited as the ‘‘Doug Bereuter Section 502 Single Family Housing Loan Guarantee Act’’. (2) Authority The Secretary shall, to the extent provided in appropriation Acts, provide guaranteed loans in accordance with this section, section 1487(d) of this title, and the last sentence of section 1490a(a)(1)(A) of this title, except as modified by the provisions of this subsection. Loans shall be guaranteed under this sub- section in an amount equal to 90 percent of the loan. (3) Eligible borrowers Loans guaranteed pursuant to this sub- section shall be made only to borrowers who are low or moderate income families or per- sons, whose incomes do not exceed 115 percent of the median income of the area, as deter- mined by the Secretary. (4) Eligible housing Loans may be guaranteed pursuant to this subsection only if the loan is used to acquire or construct a single-family residence that is— (A) to be used as the principal residence of the borrower; (B) eligible for assistance under this sec- tion, section 203(b) of the National Housing Act [12 U.S.C. 1709(b)], or chapter 37 of title 38; and (C) located in a rural area. (5) Priority and counseling for first-time home- buyers (A) In providing guaranteed loans under this subsection, the Secretary shall give priority to first-time homebuyers (as defined in para- graph (17)). (B) The Secretary may require that, as a condition of receiving a guaranteed loan pur- suant to this subsection, a borrower who is a first-time homebuyer successfully complete a program of homeownership counseling under section 1701x(a)(1)(iii) of title 12 and obtain certification from the provider of the program that the borrower is adequately prepared for the obligations of homeownership. (6) Eligible lenders Guaranteed loans pursuant to this sub- section may be made only by lenders approved by and meeting qualifications established by the Secretary. (7) Loan terms Loans guaranteed pursuant to this sub- section shall— (A) be made for a term not to exceed 30 years; (B) involve a rate of interest that is fixed over the term of the loan and does not ex- ceed the rate for loans guaranteed under chapter 37 of title 38 or comparable loans in the area that are not guaranteed; and (C) involve a principal obligation (includ- ing initial service charges, appraisal, inspec- Page 4750 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 2 So in original. Probably should be subsection ‘‘(h)(8)’’. tion, and other fees as the Secretary may ap- prove)— (i) for a first-time homebuyer, in any amount not in excess of 100 percent of the appraised value of the property as of the date the loan is accepted or the acquisi- tion cost of the property, whichever is less, plus the guarantee fee as authorized by subsection (h)(7); 2 and (ii) for any borrower other than a first- time homebuyer, in an amount not in ex- cess of the percentage of the property or the acquisition cost of the property that the Secretary shall determine, such per- centage or cost in any event not to exceed 100 percent of the appraised value of the property as of the date the loan is accepted or the acquisition cost of the property, whichever is less, plus the guarantee fee as authorized by subsection (h)(7).2 (8) Fees Notwithstanding paragraph (14)(D), with re- spect to a guaranteed loan issued or modified under this subsection, the Secretary may col- lect from the lender— (A) at the time of issuance of the guar- antee or modification, a fee not to exceed 3.5 percent of the principal obligation of the loan; and (B) an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan. (9) Refinancing Any guaranteed loan under this subsection may be refinanced and extended in accordance with terms and conditions that the Secretary shall prescribe, but in no event for an addi- tional amount or term which exceeds the limi- tations under this subsection. (10) Nonassumption Notwithstanding the transfer of property for which a guaranteed loan under this subsection was made, the borrower of a guaranteed loan under this subsection may not be relieved of liability with respect to the loan. (11) Geographical targeting In providing guaranteed loans under this subsection, the Secretary shall establish standards to target and give priority to areas that have a demonstrated need for additional sources of mortgage financing for low and moderate income families. (12) Allocation The Secretary shall provide that, in each fis- cal year, guaranteed loans under this sub- section shall be allocated among the States on the basis of the need of eligible borrowers in each State for such loans in comparison with the need of eligible borrowers for such loans among all States. (13) Loss mitigation Upon default or imminent default of any mortgage guaranteed under this subsection, mortgagees shall engage in loss mitigation ac- tions for the purpose of providing an alter- native to foreclosure (including actions such as special forbearance, loan modification, pre- foreclosure sale, deed in lieu of foreclosure, as required, support for borrower housing coun- seling, subordinate lien resolution, and bor- rower relocation), as provided for by the Sec- retary. (14) Payment of partial claims and mortgage modifications The Secretary may authorize the modifica- tion of mortgages, and establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to pay- ment of a mortgage on a 1- to 4-family resi- dence, for mortgages that are in default or face imminent default, as defined by the Sec- retary. Any payment under such program di- rected to the mortgagee shall be made at the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that— (A) the amount of the partial claim pay- ment shall be in an amount determined by the Secretary, and shall not exceed an amount equivalent to 30 percent of the un- paid principal balance of the mortgage and any costs that are approved by the Sec- retary; (B) the amount of the partial claim pay- ment shall be applied first to any out- standing indebtedness on the mortgage, in- cluding any arrearage, but may also include principal reduction; (C) the mortgagor shall agree to repay the amount of the partial claim to the Secretary upon terms and conditions acceptable to the Secretary; (D) expenses related to a partial claim or modification are not to be charged to the borrower; (E) the Secretary may authorize com- pensation to the mortgagee for lost income on monthly mortgage payments due to in- terest rate reduction; (F) the Secretary may reimburse the mort- gagee from the appropriate guaranty fund in connection with any activities that the mortgagee is required to undertake con- cerning repayment by the mortgagor of the amount owed to the Secretary; (G) the Secretary may authorize payments to the mortgagee on behalf of the borrower, under such terms and conditions as are de- fined by the Secretary, based on successful performance under the terms of the mort- gage modification, which shall be used to re- duce the principal obligation under the modified mortgage; and (H) the Secretary may authorize the modi- fication of mortgages with terms extended up to 40 years from the date of modification. (15) Assignment (A) Program authority The Secretary may establish a program for assignment to the Secretary, upon request of the mortgagee, of a mortgage on a 1- to 4- family residence guaranteed under this chapter.1 Page 4751 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 (B) Program requirements (i) In general The Secretary may encourage loan modi- fications for eligible delinquent mortgages or mortgages facing imminent default, as defined by the Secretary, through the pay- ment of the guaranty and assignment of the mortgage to the Secretary and the subsequent modification of the terms of the mortgage according to a loan modi- fication approved under this section. (ii) Acceptance of assignment The Secretary may accept assignment of a mortgage under a program under this subsection only if— (I) the mortgage is in default or facing imminent default; (II) the mortgagee has modified the mortgage or qualified the mortgage for modification sufficient to cure the de- fault and provide for mortgage payments the mortgagor is reasonably able to pay, at interest rates not exceeding current market interest rates; and (III) the Secretary arranges for serv- icing of the assigned mortgage by a mortgagee (which may include the as- signing mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate guaranty fund. (C) Payment of guaranty Under the program under this paragraph, the Secretary may pay the guaranty for a mortgage, in the amount determined in ac- cordance with paragraph (2), without reduc- tion for any amounts modified, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage, as defined by the Secretary. (D) Disposition After modification of a mortgage pursuant to this paragraph, and assignment of the mortgage, the Secretary may provide guar- antees under this subsection for the mort- gage. The Secretary may subsequently— (i) re-assign the mortgage to the mort- gagee under terms and conditions as are agreed to by the mortgagee and the Sec- retary; (ii) act as a Government National Mort- gage Association issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Government National Mortgage Association security; or (iii) re-sell the mortgage in accordance with any program that has been estab- lished for purchase by the Federal Govern- ment of mortgages insured under this sub- chapter, and the Secretary may coordinate standards for interest rate reductions available for loan modification with inter- est rates established for such purchase. (E) Loan servicing In carrying out the program under this subsection, the Secretary may require the existing servicer of a mortgage assigned to the Secretary under the program to continue servicing the mortgage as an agent of the Secretary during the period that the Sec- retary acquires and holds the mortgage for the purpose of modifying the terms of the mortgage. If the mortgage is resold pursuant to subparagraph (D)(iii), the Secretary may provide for the existing servicer to continue to service the mortgage or may engage an- other entity to service the mortgage. (16) Definitions For purposes of this subsection: (A) The term ‘‘displaced homemaker’’ means an individual who— (i) is an adult; (ii) has not worked full-time full-year in the labor force for a number of years but has, during such years, worked primarily without remuneration to care for the home and family; and (iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. (B) The term ‘‘first-time homebuyer’’ means any individual who (and whose spouse) has had no present ownership in a principal residence during the 3-year period ending on the date of purchase of the prop- erty acquired with a guaranteed loan under this subsection except that— (i) any individual who is a displaced homemaker may not be excluded from con- sideration as a first-time homebuyer under this subparagraph on the basis that the in- dividual, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse; and (ii) any individual who is a single parent may not be excluded from consideration as a first-time homebuyer under this sub- paragraph on the basis that the individual, while married, owned a home with his or her spouse or resided in a home owned by the spouse. (C) The term ‘‘single parent’’ means an in- dividual who— (i) is unmarried or legally separated from a spouse; and (ii)(I) has 1 or more minor children for whom the individual has custody or joint custody; or (II) is pregnant. (D) The term ‘‘State’’ means the States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Is- lands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, and any other possession of the United States. (17) Guarantees for refinancing loans (A) In general Upon the request of the borrower, the Sec- retary shall, to the extent provided in appro- priation Acts and subject to subparagraph (F), guarantee a loan that is made to refi- nance an existing loan that is made under this section or guaranteed under this sub- Page 4752 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 section, and that the Secretary determines complies with the requirements of this para- graph. (B) Interest rate To be eligible for a guarantee under this paragraph, the refinancing loan shall have a rate of interest that is fixed over the term of the loan and does not exceed the interest rate of the loan being refinanced. (C) Security To be eligible for a guarantee under this paragraph, the refinancing loan shall be se- cured by the same single-family residence as was the loan being refinanced, which shall be owned by the borrower and occupied by the borrower as the principal residence of the borrower. (D) Amount To be eligible for a guarantee under this paragraph, the principal obligation under the refinancing loan shall not exceed an amount equal to the sum of the balance of the loan being refinanced and such closing costs as may be authorized by the Secretary, which shall include a discount not exceeding 200 basis points and an origination fee not exceeding such amount as the Secretary shall prescribe. (E) Other requirements The provisions of the last sentence of para- graph (2) and paragraphs (3), (6), (7)(A), (8), (10), (13), and (14) shall apply to loans guar- anteed under this paragraph, and no other provisions of paragraphs (2) through (15) shall apply to such loans. (F) Authority to establish limitation The Secretary may establish limitations on the number of loans guaranteed under this paragraph, which shall be based on mar- ket conditions and other factors as the Sec- retary considers appropriate. (18) Delegation of approval The Secretary may delegate, in part or in full, the Secretary’s authority to approve and execute binding Rural Housing Service loan guarantees pursuant to this subsection to cer- tain preferred lenders, in accordance with standards established by the Secretary. (i) Guaranteed underwriting user fee (1) Authority; maximum amount To the extent provided in advance in appro- priations Acts, the Secretary may assess and collect a fee for a lender to access the auto- mated underwriting systems of the Depart- ment in connection with such lender’s partici- pation in the single family loan program under this section and only in an amount nec- essary to cover the costs of information tech- nology enhancements, improvements, mainte- nance, and development for automated under- writing systems used in connection with the single family loan program under this section, except that such fee shall not exceed $50 per loan. (2) Crediting; availability Any amounts collected from such fees shall be credited to the Rural Development Expense Account as offsetting collections and shall re- main available until expended, in the amounts provided in appropriation Acts, solely for ex- penses described in paragraph (1). (July 15, 1949, ch. 338, title V, § 502, 63 Stat. 433; Pub. L. 87–70, title VIII, § 801(b), June 30, 1961, 75 Stat. 186; Pub. L. 87–723, § 4(a)(2), Sept. 28, 1962, 76 Stat. 671; Pub. L. 89–117, title X, § 1002, Aug. 10, 1965, 79 Stat. 497; Pub. L. 89–754, title VIII, § 802, Nov. 3, 1966, 80 Stat. 1282; Pub. L. 93–383, title V, § 505(b), Aug. 22, 1974, 88 Stat. 693; Pub. L. 95–128, title V, § 502(a), Oct. 12, 1977, 91 Stat. 1139; Pub. L. 96–153, title V, § 503, Dec. 21, 1979, 93 Stat. 1134; Pub. L. 96–399, title V, § 514(a), Oct. 8, 1980, 94 Stat. 1671; Pub. L. 98–181, title I [title V, § 503(a), (d)], Nov. 30, 1983, 97 Stat. 1240, 1241; Pub. L. 98–479, title I, § 105(b)(1), Oct. 17, 1984, 98 Stat. 2226; Pub. L. 100–242, title II, § 241, title III, § 314, Feb. 5, 1988, 101 Stat. 1886, 1897; Pub. L. 100–628, title X, § 1028, Nov. 7, 1988, 102 Stat. 3271; Pub. L. 101–235, title II, § 206, Dec. 15, 1989, 103 Stat. 2041; Pub. L. 101–625, title VII, §§ 704(a), 705(a), 706(b), 719(b), Nov. 28, 1990, 104 Stat. 4283, 4284, 4297; Pub. L. 102–142, title VII, § 743(b), Oct. 28, 1991, 105 Stat. 915; Pub. L. 102–550, title VII, §§ 701(g), 702(a), 703, 704, 712(a), (b), Oct. 28, 1992, 106 Stat. 3834, 3835, 3841; Pub. L. 104–180, title VII, § 734(c)(3)(A), (B), Aug. 6, 1996, 110 Stat. 1602; Pub. L. 105–276, title V, § 599C(e)(2)(A), (f), Oct. 21, 1998, 112 Stat. 2662, 2663; Pub. L. 106–569, title VII, § 701, Dec. 27, 2000, 114 Stat. 3013; Pub. L. 108–285, § 3(b), (c), Aug. 2, 2004, 118 Stat. 917, 918; Pub. L. 108–447, div. A, title VII, § 726(b), Dec. 8, 2004, 118 Stat. 2842; Pub. L. 111–22, div. A, title I, § 101(a), (b), May 20, 2009, 123 Stat. 1633, 1635; Pub. L. 111–212, title I, § 102(a), July 29, 2010, 124 Stat. 2303; Pub. L. 114–201, title II, §§ 201, 202, July 29, 2016, 130 Stat. 805; Pub. L. 115–141, div. A, title VII, § 758, Mar. 23, 2018, 132 Stat. 395.) Editorial Notes REFERENCES IN TEXT Section 1484(j) of this title, referred to in subsec. (c)(4)(B)(iv), was repealed by Pub. L. 106–569, title VII, § 708(b), Dec. 27, 2000, 114 Stat. 3018. The Housing and Community Development Act of 1974, referred to in subsec. (e)(1)(A), (2)(B), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. Title VI of the Housing and Community Development Act of 1974 is known as the National Manufactured Housing Construction and Safety Standards Act of 1974 and is classified generally to chapter 70 (§ 5401 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. The National Housing Act, referred to in subsec. (e)(1)(B), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the National Housing Act is classified principally to subchapter II (§ 1707 et seq.) of chapter 13 of Title 12, Banks and Banking. For complete classification of this Act to the Code, see section 1701 of Title 12 and Tables. Section 502, referred to in subsec. (h), means section 502 of act July 15, 1949, ch. 338, 63 Stat. 433, which is classified to this section. This chapter, referred to in subsec. (h)(15)(A), appear- ing in the original is unidentifiable because title V of act July 15, 1949, does not contain chapters. AMENDMENTS 2018—Subsec. (i)(1). Pub. L. 115–141 added par. (1) and struck out former par. (1). Prior to amendment, text read as follows: ‘‘The Secretary may assess and collect a fee for a lender to access the automated underwriting systems of the Department in connection with such Page 4753 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 lender’s participation in the single family loan pro- gram under this section and only in an amount nec- essary to cover the costs of information technology en- hancements, improvements, maintenance, and develop- ment for automated underwriting systems used in con- nection with the single family loan program under this section, except that such fee shall not exceed $50 per loan.’’ 2016—Subsec. (h)(18). Pub. L. 114–201, § 201, added par. (18). Subsec. (i). Pub. L. 114–201, § 202, added subsec. (i). 2010—Subsec. (h)(8). Pub. L. 111–212 amended par. (8) generally. Prior to amendment, text read as follows: ‘‘With respect to a guaranteed loan under this sub- section, the Secretary may collect from the lender at the time of issuance of the guarantee a fee equal to not more than 1 percent of the principal obligation of the loan.’’ 2009—Subsec. (h)(5)(A). Pub. L. 111–22, § 101(b)(1), sub- stituted ‘‘(as defined in paragraph (17))’’ for ‘‘(as de- fined in paragraph (13))’’. Subsec. (h)(13) to (16). Pub. L. 111–22, § 101(a), added pars. (13) to (15) and redesignated former par. (13) as (16). Former par. (14) redesignated (17). Subsec. (h)(17). Pub. L. 111–22, § 101(a)(1), redesignated par. (14) as (17). Subsec. (h)(17)(E). Pub. L. 111–22, § 101(b)(2), which di- rected amendment of ‘‘paragraph (18)(E)[ ](as so redes- ignated by subsection (a)(2))’’ by substituting ‘‘para- graphs (3), (6), (7)(A), (8), (10), (13), and (14)’’ for ‘‘para- graphs (3), (6), (7)(A), (8), and (10)’’ and ‘‘paragraphs (2) through (15)’’ for ‘‘paragraphs (2) through (13)’’, was ex- ecuted by making the substitutions in par. (17)(E) to re- flect the probable intent of Congress. 2004—Subsec. (h). Pub. L. 108–285, § 3(b)(3), substituted ‘‘Doug Bereuter section 502 single family housing loan guarantee program’’ for ‘‘Guaranteed loans’’ in head- ing. Subsec. (h)(1) to (4). Pub. L. 108–285, § 3(b)(1), (2), added par. (1) and redesignated former pars. (1) to (3) as (2) to (4), respectively. Former par. (4) redesignated (5). Subsec. (h)(5). Pub. L. 108–285, § 3(b)(1), redesignated par. (4) as (5). Former par. (5) redesignated (6). Subsec. (h)(5)(A). Pub. L. 108–285, § 3(c)(1), substituted ‘‘paragraph (13)’’ for ‘‘paragraph (12)(A)’’. Subsec. (h)(6). Pub. L. 108–285, § 3(b)(1), redesignated par. (5) as (6). Former par. (6) redesignated (7). Subsec. (h)(7). Pub. L. 108–285, § 3(b)(1), redesignated par. (6) as (7). Former par. (7) redesignated (8). Subsec. (h)(7)(C). Pub. L. 108–447, which directed in- sertion of ‘‘, plus the guarantee fee as authorized by subsection (h)(7)’’ after ‘‘whichever is less’’ in pars. (i) and (ii) of subsec. (h)(6)(C), was executed by making the insertion in cls. (i) and (ii) of par. (7)(C), to reflect the probable intent of Congress and the amendment by Pub. L. 108–285, § 3(b)(1). See above. Subsec. (h)(8) to (13). Pub. L. 108–285, § 3(b)(1), redesig- nated pars. (7) to (12) as (8) to (13), respectively. Former par. (13) redesignated (14). Subsec. (h)(14). Pub. L. 108–285, § 3(b)(1), redesignated par. (13) as (14). Subsec. (h)(14)(A). Pub. L. 108–285, § 3(c)(2)(A), made technical amendment to heading in original Act. Subsec. (h)(14)(E). Pub. L. 108–285, § 3(c)(2)(B), sub- stituted ‘‘paragraph (2) and paragraphs (3), (6), (7)(A), (8), and (10)’’ for ‘‘paragraph (1) and paragraphs (2), (5), (6)(A), (7), and (9)’’ and ‘‘paragraphs (2) through (13)’’ for ‘‘paragraphs (1) through (12)’’. 2000—Subsec. (h)(13). Pub. L. 106–569 added par. (13). 1998—Subsec. (c)(1)(A)(i). Pub. L. 105–276, § 599C(e)(2)(A)(i), substituted ‘‘, (a)(2), or (5)’’ for ‘‘or (a)(2)’’. Subsec. (c)(4)(B)(ii). Pub. L. 105–276, § 599C(e)(2)(A)(ii), inserted before period at end ‘‘, or additional assistance or an increase in assistance provided under section 1490a(a)(5) of this title’’. Subsec. (c)(4)(B)(iii). Pub. L. 105–276, § 599C(e)(2)(A)(iii), was executed by inserting ‘‘or 1490a(a)(5)’’ after ‘‘section 1490a(a)(2)’’ to reflect the probable intent of Congress, notwithstanding the fact that the verb ‘‘inserting’’ was missing from the direc- tory language. Subsec. (c)(4)(B)(v). Pub. L. 105–276, § 599C(e)(2)(A)(iv), inserted before period at end ‘‘, or current tenants of projects not assisted under section 1490a(a)(5) of this title’’. Subsec. (c)(5)(C)(iii). Pub. L. 105–276, § 599C(e)(2)(A)(v), struck out comma after ‘‘1490a(a)(2)(A) of this title’’ and inserted ‘‘or any assistance payments received under section 1490a(a)(5) of this title,’’ before ‘‘with re- spect’’. Subsec. (c)(5)(D). Pub. L. 105–276, § 599C(e)(2)(A)(vi), inserted before period at end ‘‘or, in the case of housing assisted under section 1490a(a)(5) of this title, does not exceed the rents established for the project under such section’’. Subsec. (h)(6)(C). Pub. L. 105–276, § 599C(f), which di- rected the striking out of ‘‘, subject to the maximum dollar amount limitation of section 203(b)(2) of the Na- tional Housing Act’’ each place it appeared, was exe- cuted by striking out ‘‘, subject to the maximum dollar limitation of section 203(b)(2) of the National Housing Act’’ after ‘‘whichever is less’’ in cl. (i) and after ‘‘Sec- retary shall determine’’ in cl. (ii), to reflect the prob- able intent of Congress. 1996—Subsec. (c)(4)(B)(iv). Pub. L. 104–180, § 734(c)(3)(A), inserted before period at end ‘‘or under paragraphs (1) and (2) of section 1484(j) of this title, ex- cept that an equity loan referred to in this clause may not be made available after August 6, 1996, unless the Secretary determines that the other incentives avail- able under this subparagraph are not adequate to pro- vide a fair return on the investment of the borrower, to prevent prepayment of the loan insured under section 1484 or 1485 of this title, or to prevent the displacement of tenants of the housing for which the loan was made’’. Subsec. (c)(4)(C). Pub. L. 104–180, § 734(c)(3)(B), in in- troductory provisions substituted ‘‘The Secretary may approve assistance under subparagraph (B) for assisted housing only if the restrictive period has expired for any loan for the housing made or insured under section 1484 or 1485 of this title pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, and the Secretary determines that the combina- tion of assistance provided—’’ for ‘‘The Secretary may approve assistance under subparagraph (B) only if the Secretary determines that the combination of assist- ance provided—’’. 1992—Subsec. (a)(3). Pub. L. 102–550, § 702(a), added par. (3). Subsec. (c)(2), (4)(A). Pub. L. 102–550, § 712(a)(1), (2), substituted ‘‘prior to December 15, 1989’’ for ‘‘before De- cember 21, 1979’’. Subsec. (e)(4)(B)(vi). Pub. L. 102–550, § 712(b), added cl. (vi). Subsec. (e)(5)(F), (G). Pub. L. 102–550, § 712(a)(3), (4), substituted ‘‘prior to December 15, 1989’’ for ‘‘before De- cember 21, 1979’’. Subsec. (f). Pub. L. 102–550, § 704, inserted ‘‘or on trib- al allotted or Indian trust land’’ in pars. (1) and (2). Subsec. (g)(3). Pub. L. 102–550, § 701(g), substituted ‘‘1993 and 1994’’ for ‘‘1991 and 1992’’. Subsec. (h)(2). Pub. L. 102–550, § 703, inserted ‘‘115 per- cent of’’ after ‘‘exceed’’. 1991—Subsec. (h)(3)(C). Pub. L. 102–142 struck out be- fore period at end ‘‘that is more than 25 miles from an urban area or densely populated area’’. 1990—Subsec. (c)(1)(B). Pub. L. 101–625, § 719(b), in- serted ‘‘initial’’ after ‘‘any’’. Subsec. (f). Pub. L. 101–625, § 704(a), added subsec. (f). Subsec. (g). Pub. L. 101–625, § 705(a), added subsec. (g). Subsec. (h). Pub. L. 101–625, § 706(b), added subsec. (h). 1989—Subsec. (c)(1). Pub. L. 101–235 designated exist- ing provisions as subpar. (A), redesignated former sub- pars. (A) and (B) as cls. (i) and (ii), respectively, in- serted ‘‘but before December 15, 1989,’’ after ‘‘December 21, 1979,’’ in introductory provisions and cl. (i), and added subpar. (B). 1988—Subsec. (c)(3). Pub. L. 100–242, § 241, added par. (3). Page 4754 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 Subsec. (c)(4). Pub. L. 100–242, § 241, added par. (4). Subsec. (c)(4)(B)(iv). Pub. L. 100–628, § 1028(a), sub- stituted ‘‘paragraphs (1) and (2) of section 1485(c)’’ for ‘‘paragraphs (7) and (8) of section 1485(b)’’. Subsec. (c)(5). Pub. L. 100–242, § 241, added par. (5). Subsec. (c)(5)(B)(iii). Pub. L. 100–628, § 1028(b), added cl. (iii). Subsec. (c)(5)(I). Pub. L. 100–628, § 1028(c), substituted ‘‘Definitions’’ for ‘‘Definition’’ in heading and amended text generally. Prior to amendment, text read as fol- lows: ‘‘For purposes of this paragraph, the term ‘non- profit organization’ means any private organization— ‘‘(i) no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual; and ‘‘(ii) that is approved by the Secretary as to finan- cial responsibility.’’ Subsec. (e)(3). Pub. L. 100–242, § 314, added par. (3). 1984—Subsec. (d)(1). Pub. L. 98–479 substituted ‘‘per- cent of the funds approved in appropriation Acts for use under this section shall be set aside and made available only for very low-income families or persons’’ for ‘‘per centum of the dwelling units financed under this sec- tion shall be available only for occupancy by very low- income families or persons’’. Subsec. (d)(2). Pub. L. 98–479 substituted ‘‘percent of the funds allocated to each State under this section shall be available only for very low-income families or persons’’ for ‘‘per centum of the dwelling units in each State financed under this section shall be available only for occupancy by very low-income families or per- sons’’. 1983—Subsec. (a)(1). Pub. L. 98–181, § 503(d)(1), (2), des- ignated existing provisions as par. (1) and substituted ‘‘The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant’s note to compensate for any defi- ciency in the applicant’s repayment ability. At the bor- rower’s option, the borrower may prepay to the Sec- retary as escrow agent, on terms and conditions pre- scribed by him, such taxes, insurance, and other ex- penses as the Secretary may require in accordance with section 1471(e) of this title’’ for ‘‘in the case of appli- cants described in clauses (1) and (2) of section 1471(a) of this title, at a rate not to exceed 5 per centum per annum on the unpaid balance of principal, and, in the case of applicants described in clause (3) of section 1471(a) of this title and applicants under sections 1473 and 1474 of this title, at a rate not to exceed 4 per cen- tum per annum on such unpaid balance. Loans made or insured under this subchapter shall be conditioned on the borrower paying such fees and other charges as the Secretary may require and on the borrower prepaying to the Secretary as escrow agent, on terms and condi- tions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accord- ance with section 1471(e) of this title. The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the appli- cant’s note to compensate for any deficiency in the ap- plicant’s repayment ability’’. Subsec. (a)(2). Pub. L. 98–181, § 503(d)(3), added par. (2). Subsecs. (d), (e). Pub. L. 98–181, § 503(a), added subsecs. (d) and (e). 1980—Subsec. (c). Pub. L. 96–399, in par. (1), sub- stituted ‘‘The Secretary may not accept’’ for ‘‘Except as provided in paragraph (2), the Secretary may not ac- cept’’, and ‘‘entered into after’’ for ‘‘entered into before or after’’ in two places, and in par. (2) substituted pro- visions granting priority for relocation to tenants dis- placed by virtue of prepayment or refinancing of loans on or after Oct. 8, 1980, for provisions relating to ac- ceptance of an offer to prepay unless, after examina- tion of the consequences of such offer, the Secretary determines that prepayment will result in displace- ment of tenants, and in the case of facilities containing more than ten units, will have an adverse effect on the supply of affordable and decent housing for low and moderate income and elderly persons. 1979—Subsec. (b)(2). Pub. L. 96–153, § 503(a), inserted provisions that prepayment of loans made or insured under section 1484 or 1485 of this title shall be subject to the provisions of subsec. (c) of this section. Subsec. (c). Pub. L. 96–153, § 503(b), added subsec. (c). 1977—Subsec. (b)(3). Pub. L. 95–128 inserted introduc- tory phrase ‘‘except for guaranteed loans,’’. 1974—Subsec. (a). Pub. L. 93–383 inserted provisions relating to the borrower prepaying to the Secretary as escrow agent taxes, insurance, and other expenses re- quired by the Secretary in accordance with section 1471(e) of this title. 1966—Subsec. (a). Pub. L. 89–754 substituted ‘‘The’’ for ‘‘In cases of applicants who are elderly persons, the’’ in third sentence. 1965—Subsec. (a). Pub. L. 89–117 increased to 5 per centum the interest rate in the case of applicants de- scribed in clauses (1) and (2) of section 1471(a) of this title and also authorized the Secretary to charge fees on loans made or insured under this subchapter. 1962—Subsec. (a). Pub. L. 87–723 authorized the Sec- retary to accept, in the case of applicant’s who are el- derly persons, the personal liability of any person with adequate repayment ability who will cosign the appli- cant’s note to compensate for any deficiency in the ap- plicant’s repayment ability. 1961—Subsec. (b)(1). Pub. L. 87–70 substituted ‘‘or such other security’’ for ‘‘and such additional security’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–276, title V, § 599C(g), Oct. 21, 1998, 112 Stat. 2663, provided that: ‘‘The amendments made by this section [amending this section and sections 1479, 1483 to 1485, 1490a, 1490j, and 1490p–2 of this title] are made on, and shall apply beginning upon, the date of the enactment of this Act [Oct. 21, 1998].’’ EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98–479, title I, § 105(b)(2), Oct. 17, 1984, 98 Stat. 2226, provided that: ‘‘Notwithstanding any other provi- sion of law, the provisions of section 502(d) of the Hous- ing Act of 1949 [subsec. (d) of this section], as amended by paragraph (1), shall apply with respect to fiscal year 1985 and thereafter, and the provisions of such section, as so amended, may not be changed or superseded ex- cept by another provision of law which amends such section.’’ REGULATIONS Pub. L. 101–625, title VII, § 704(b), Nov. 28, 1990, 104 Stat. 4283, provided that: ‘‘Not later than the expira- tion of the 120-day period beginning on the date of en- actment of this Act [Nov. 28, 1990], the Secretary of Ag- riculture shall issue any regulations necessary to carry out the amendment made by subsection (a) [amending this section].’’ Pub. L. 101–625, title VII, § 705(b), Nov. 28, 1990, 104 Stat. 4283, provided that: ‘‘Not later than the expira- tion of the 120-day period beginning on the date of en- actment of this Act [Nov. 28, 1990], the Secretary of Ag- riculture shall issue any regulations necessary to carry out the amendment made by subsection (a) [amending this section].’’ Pub. L. 101–625, title VII, § 706(d), Nov. 28, 1990, 104 Stat. 4286, provided that: ‘‘(1) PROPOSED REGULATIONS AND COMMENT PERIOD.— Not later than 120 days after the date of the enactment of this Act [Nov. 28, 1990], the Secretary of Agriculture shall publish in the Federal Register proposed regula- tions to implement the amendments made by this sec- tion [amending this section and section 1701x of Title 12, Banks and Banking]. The Secretary shall receive comments regarding the regulations during the 30-day period beginning on the date of the publication of the proposed regulations. ‘‘(2) IMPLEMENTATION.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Agriculture shall issue final regulations to implement the amendments made by this section. The Secretary Page 4755 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1472 shall provide for the regulations to take effect not later than 30 days after the date on which the regulations are issued. ‘‘(3) APPLICABILITY.—The amendments made by this section shall not apply to guaranteed loans under title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) made before the date on which the final regulations issued by the Secretary under paragraph (2) take effect. ‘‘(4) CONSULTATION.—In developing and promulgating the regulations under paragraphs (1) and (2), the Sec- retary of Agriculture shall consult with the chair- person of the Federal Agricultural Mortgage Corpora- tion and shall solicit the views of borrowers, lenders, realtors, and homebuilders experienced and knowledge- able regarding housing in rural areas to provide that the regulations promulgated ensure that guaranteed loans pursuant to the amendments made by this sec- tion— ‘‘(A) are made in a manner that is cost-effective; and ‘‘(B) are made in a manner that reduces, to the ex- tent practicable, the burden of administration and paperwork for borrowers and lenders.’’ PROCEDURE Pub. L. 111–22, div. A, title I, § 101(c), May 20, 2009, 123 Stat. 1635, provided that: ‘‘(1) IN GENERAL.—The promulgation of regulations necessitated and the administration actions required by the amendments made by this section [amending this section] shall be made without regard to— ‘‘(A) the notice and comment provisions of section 553 of title 5, United States Code; ‘‘(B) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and ‘‘(C) chapter 35 of title 44, United States Code (com- monly known as the ‘Paperwork Reduction Act’). ‘‘(2) CONGRESSIONAL REVIEW OF AGENCY RULEMAKING.— In carrying out this section, and the amendments made by this section, the Secretary shall use the authority provided under section 808 of title 5, United States Code.’’ CONGRESSIONAL FINDINGS FOR 2004 AMENDMENT Pub. L. 108–285, § 3(a), Aug. 2, 2004, 118 Stat. 917, pro- vided that: ‘‘The Congress finds that— ‘‘(1) the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625, see Tables for classifica- tion], enacted November 28, 1990, established the sec- tion 502 single family housing loan guarantee pro- gram of the Rural Housing Service of the United States Department of Agriculture; ‘‘(2) Congressman Doug Bereuter of Nebraska was the legislative author of the single family housing loan guarantee program; ‘‘(3) 316,625 single family loans have been guaran- teed under the program since its implementation in 1991; ‘‘(4) the program facilitates home ownership for low- to moderate-income borrowers in rural areas and nonmetropolitan communities who are unable to ob- tain conventional home mortgage financing; and ‘‘(5) in 2003, the average income of a borrower with a loan guaranteed under the section 502 guarantee program was $34,124.’’ MAXIMUM LEVEL FOR RURAL SINGLE FAMILY HOUSING ASSISTANCE Pub. L. 108–447, div. A, title VII, § 765, Dec. 8, 2004, 118 Stat. 2847, provided that: ‘‘Notwithstanding any other provision of law, for any fiscal year and hereafter, in the case of a high cost isolated rural area in Alaska that is not connected to a road system, the maximum level for the single family housing assistance shall be 150 percent of the average income level in the metro- politan areas of the State and 115 percent of all other eligible areas of the State.’’ Similar provisions were contained in the following appropriation acts: Pub. L. 109–97, title VII, § 754(3), Nov. 10, 2005, 119 Stat. 2157. Pub. L. 108–199, div. A, title VII, § 763, Jan. 23, 2004, 118 Stat. 39. FEE FOR GUARANTEED LOANS Pub. L. 106–387, § 1(a) [title VII, § 739], Oct. 28, 2000, 114 Stat. 1549, 1549A–34, which provided that, notwith- standing subsec. (h)(7) of this section, the fee collected by the Secretary of Agriculture for a guaranteed loan under such subsec. (h) at the time of the issuance of such guarantee could be in an amount equal to not more than 2 percent of the principal obligation of the loan, was repealed by Pub. L. 111–212, title I, § 102(b), July 29, 2010, 124 Stat. 2303. INCOME LIMIT FOR BORROWERS Pub. L. 106–387, § 1(a) [title VII, § 751], Oct. 28, 2000, 114 Stat. 1549, 1549A–41, provided that: ‘‘Hereafter, the Sec- retary of Agriculture shall consider any borrower whose income does not exceed 115 percent of the median family income of the United States as meeting the eli- gibility requirements for a borrower contained in sec- tion 502(h)(2) of the Housing Act of 1949 (42 U.S.C. 1472(h)(2)).’’ RURAL HOUSING LOAN GUARANTEES; FINDINGS AND PURPOSE Pub. L. 101–625, title VII, § 706(a), Nov. 28, 1990, 104 Stat. 4284, provided that: ‘‘(1) FINDINGS.—The Congress finds that— ‘‘(A) the Federal Government should encourage sup- port for homeownership through nonsubsidized mort- gage loans guaranteed by the Secretary of Agri- culture for the purchase of modest homes located in rural areas and small communities of the country that are not adequately served by private conven- tional, federally insured, or guaranteed mortgage credit providers; and ‘‘(B) many rural areas contain disproportionate amounts of substandard housing in need of repair, but lack the necessary funding and support to modernize such housing through preservation. ‘‘(2) PURPOSE.—The purpose of this section [amending this section and section 1701x of Title 12, Banks and Banking, and enacting provisions set out above] is to expand homeownership opportunities to low- and mod- erate-income residents of rural areas of the country through the establishment of guaranteed rural housing loans to be made available in rural locations where there is an insufficient availability of mortgage financ- ing from other sources.’’ RURAL HOUSING GUARANTEED LOAN DEMONSTRATION Pub. L. 100–242, title III, § 304, Feb. 5, 1988, 101 Stat. 1894, as amended by Pub. L. 100–628, title X, § 1041(a), (b), Nov. 7, 1988, 102 Stat. 3272, provided for establish- ment by Secretary of Agriculture of a rural housing guaranteed loan demonstration to provide guaranteed loans in accordance with section 1487(d) of this title and last sentence of section 1490(a)(1)(A) of this title, authorized amount available for such loans, established loan criteria, directed Secretary to submit to Congress, as soon as practicable after Sept. 30, 1989, an interim report setting forth findings and recommendations as a result of the demonstration and a final report on such findings and recommendations as soon as practicable after Sept. 30, 1991, prohibited Secretary from providing any guaranteed loans after Sept. 30, 1991, except pursu- ant to a commitment entered into on or before such date, and excluded applicability of subsec. (d) of this section and second sentence of section 1487(e) of this title to loan demonstration. PROHIBITION ON ACCEPTANCE OF PREPAYMENT OF CERTAIN LOANS Pub. L. 100–71, title I, July 11, 1987, 101 Stat. 428, as amended by Pub. L. 100–122, § 2(d), Sept. 30, 1987, 101 Page 4756 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1473 Stat. 793; Pub. L. 100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100–170, Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat. 1327, provided that: ‘‘The limitations on loan prepayments contained in section 634 of the Agri- culture, Rural Development, and Related Agencies Ap- propriations Act, 1987 [section 101(a) [title VI, § 634] of Pub. L. 99–500 and 99–591, set out below] shall remain in effect through March 15, 1988.’’ Pub. L. 99–500, § 101(a) [title VI, § 634], Oct. 18, 1986, 100 Stat. 1783, 1783–34, and Pub. L. 99–591, § 101(a) [title VI, § 634], Oct. 30, 1986, 100 Stat. 3341, 3341–34, provided that: ‘‘Notwithstanding any other provision of law, including section 502(c)(2) of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) [subsec. (c)(2) of this section], none of the funds appropriated under this or any other Act shall be used prior to June 30, 1987 to accept prepayment of any loan made under section 515 of the Housing Act of 1949 [section 1485 of this title], unless such loan was made at least twenty years prior to the date of prepayment or, for loans made before December 21, 1979, the Secretary makes a determination that a supply of adequate, com- parable housing is available in the community, or that prepayment of such loans will not result in a substan- tial increase in rents to tenants in residence upon date of prepayment or displacement of such tenants.’’ STUDY AND REPORT OF COMPARISON OF CONSTRUCTION COSTS AND ENERGY SAVINGS BETWEEN MANUFAC- TURED HOMES BUILT UNDER NATIONAL MANUFAC- TURED HOUSING SAFETY STANDARDS AND OTHER HOMES Pub. L. 98–181, title I [title V, § 503(b)], Nov. 30, 1983, 97 Stat. 1241, provided that within 18 months from the issuance by the Secretary of Agriculture of regulations under subsec. (e)(2) of this section, the Secretary of En- ergy, in consultation with the Secretary of Housing and Urban Development and the Secretary of Agri- culture, would conduct a study and transmit to the Congress a report comparing the increased construc- tion costs, actual annual energy use, and the projected value of energy saved over the expected life of the home or the mortgage term, whichever is shorter, of manufactured homes financed under titles I and II of the National Housing Act (12 U.S.C. 1702 et seq., 1707 et seq.), or under this subchapter and built according to national manufactured housing safety standards. STUDY AND REPORT TO CONGRESS OF ADVERSE EFFECTS ON HOUSING OF PREPAYMENT OF LOANS Pub. L. 96–399, title V, § 514(b), Oct. 8, 1980, 94 Stat. 1672, required Secretary of Agriculture to conduct a study of, and report to Congress not later than 6 months after Oct. 8, 1980, on any adverse effects the amendments made by subsection (a) [amending this section] may have on housing, particularly for the el- derly and persons of low income. Executive Documents TERMINATION OF TRUST TERRITORY OF THE PACIFIC ISLANDS For termination of Trust Territory of the Pacific Is- lands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions. § 1473. Loans for housing and buildings on poten- tially adequate farms; conditions and terms If the Secretary determines (a) that, because of the inadequacy of the income of an eligible applicant from the farm to be improved and from other sources, said applicant may not rea- sonably be expected to make annual repayments of principal and interest in an amount sufficient to repay the loan in full within the period of time prescribed by the Secretary as authorized in this subchapter; (b) that the income of the ap- plicant may be sufficiently increased within a period of not to exceed five years by improve- ment or enlargement of the farm or an adjust- ment of the farm practices or methods; and (c) that the applicant has adopted and may reason- ably be expected to put into effect a plan of farm improvement, enlargement, or adjusted prac- tices or production which, in the opinion of the Secretary, will increase the applicant’s income from said farm within a period of not to exceed five years to the extent that the applicant may be expected thereafter to make annual repay- ments of principal and interest sufficient to repay the balance of the indebtedness less pay- ments in cash and credits for the contributions to be made by the Secretary as hereinafter pro- vided, the Secretary may make a loan in an amount necessary to provide adequate farm dwellings and buildings on said farm under the terms and conditions prescribed in section 1472 of this title. In addition, the Secretary may agree with the borrower to make annual con- tributions during the said five-year period in the form of credits on the borrower’s indebtedness in an amount not to exceed the annual install- ment of interest and 50 per centum of the prin- cipal payments accruing during any installment year up to and including the fifth installment year, subject to the conditions that the bor- rower’s income is, in fact, insufficient to enable the borrower to make payments in accordance with the plan or schedule prescribed by the Sec- retary and that the borrower pursues his plan of farm reorganization and improvements or en- largement with due diligence. Except as provided in title 11, this agreement with respect to credits or principal and interest upon the borrower’s indebtedness shall not be assignable nor accrue to the benefit of any third party without the written consent of the Sec- retary and the Secretary shall have the right, at his option, to cancel the agreement upon the sale of the farm or the execution or creation of any lien thereon subsequent to the lien given to the Secretary, or to refuse to release the lien given to the Secretary except upon payment in cash of the entire original principal plus accrued interest thereon less actual cash payments of principal and interest when the Secretary deter- mines that the release of the lien would permit the benefits of this section to accrue to a person not eligible to receive such benefits. (July 15, 1949, ch. 338, title V, § 503, 63 Stat. 434; Pub. L. 95–598, title III, § 329, Nov. 6, 1978, 92 Stat. 2679.) Editorial Notes AMENDMENTS 1978—Pub. L. 95–598 inserted introductory phrase ‘‘Ex- cept as provided in title 11’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598, set out as an Effec- tive Date note preceding section 101 of Title 11, Bank- ruptcy.