12 U.S.C. § 1744 — Insurance of loans for manufacture of

Page 815 TITLE 12—BANKS AND BANKING § 1744 ance premiums paid after default; less the sum of (i) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation on the date of default; (ii) any amount received on account of the mortgage after such date; and (iii) any net income received by the mortgagee from the property after such date: Provided, That the mortgagee in the event of a default under the mortgage may, at its option and in ac- cordance with regulations of, and in a period to be determined by the Secretary, proceed to fore- close on and obtain possession of or otherwise acquire such property from the mortgagor after default, and receive the benefits of the insurance as herein provided, upon (1) the prompt convey- ance to the Secretary of title to the property which meets the requirements of the rules and regulations of the Secretary in force at the time the mortgage was insured, and which is evi- denced in the manner prescribed by such rules and regulations; and (2) the assignment to him of all claims of the mortgagee against the mort- gagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims that may have been released with the consent of the Secretary. Upon such convey- ance and assignment, the obligation of the mortgagee to pay the premium charges for in- surance shall cease and the mortgagee shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (i) hereof, shall not apply. (d) Certificates of claim; amount The certificate of claim issued by the Sec- retary to any mortgagee in connection with the insurance of mortgages under this section shall be for an amount determined in accordance with subsections (e) and (f) of section 1739 of this title, except that any amount remaining after the payment of the full amount under the cer- tificate of claim shall be retained by the Sec- retary and credited to the General Insurance Fund. (e) Debentures; date of issuance; interest Debentures issued under this section shall be issued in accordance with the provisions of sec- tion 1739 (d) of this title except that such deben- tures shall be dated as of the date of default as determined in subsection (c) of this section, and shall bear interest from such date. (f) Applicability of other provisions The provisions of section 1713(k) of this title shall be applicable to mortgages insured under this section, except that, as applied to such mortgages, the reference therein to subsection (g) shall be construed to refer to subsection (c) of this section. (g) Mortgages in connection with sale of prop- erty under subchapter I, II, VIII, or X The Secretary shall also have power to insure under this subchapter or subchapter I, II, VIII, or X any mortgage executed in connection with the sale by him of any property acquired under any of such subchapters without regard to limi- tations upon eligibility, time, or aggregate amount contained therein. (June 27, 1934, ch. 847, title VI, § 608, as added May 26, 1942, ch. 319, § 11, 56 Stat. 303; amended Mar. 31, 1945, ch. 48, § 2, 59 Stat. 47; May 22, 1946, ch. 268, § 10(f), (g), 60 Stat. 214; Aug. 10, 1948, ch. 832, title I, § 101(b), (c), 62 Stat. 1269; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Sept. 1, 1951, ch. 378, title II, § 206, 65 Stat. 303; Pub. L. 89–117, title XI, § 1108(q), Aug. 10, 1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17.) Editorial Notes REFERENCES IN TEXT The General Insurance Fund, referred to in subsecs. (b) and (d), was established by section 1735c of this title. AMENDMENTS 1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (b)(1), (2), (3)(B), following (C), (c), (d), and (g). Subsec. (b)(3)(B). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’. 1965—Subsecs. (b)(1), (d). Pub. L. 89–117, § 1108(q)(1), substituted ‘‘General Insurance Fund’’ for ‘‘War Hous- ing Insurance Fund’’. Subsec. (f). Pub. L. 89–117, § 1108(q)(2), struck out pro- visions that, as applied to mortgages insured under this section, all references in section 1713(k) of this title to the ‘‘Housing Fund’’ shall be construed to refer to the ‘‘War Housing Insurance Fund’’. 1951—Subsec. (g). Act Sept. 1, 1951, inserted references to subchapters I, VIII and X of this chapter. 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. 1948—Subsec. (b). Act Aug. 10, 1948, inserted second proviso in par. (3)(B), substituted ‘‘$8,100 per family unit’’ for ‘‘$1,500 per room’’ and struck out proviso re- lating to authority to increase ‘‘$1,500’’ to ‘‘$1,800’’ per room. 1946—Subsec. (b)(2). Act May 22, 1946, substituted ‘‘Preference or priority of opportunity in the occu- pancy of the mortgaged property for veterans of World War II and their immediate families, and for hardship cases as defined by the Administrator, shall be provided under such regulations and procedures as may be pre- scribed by the Administrator’’ for ‘‘The mortgaged property shall be designed for rent for residential use by warworkers’’. Subsec. (b)(3). Act May 22, 1946, substituted ‘‘nec- essary current cost’’ after ‘‘estimates will be the’’ for ‘‘reasonable replacement cost’’ in par. (B), and in- creased mortgage per room from $1,350 to $1,500 and in- serted proviso in par. (C). Subsec. (c). Act May 22, 1946, inserted ‘‘and any mort- gage insurance premiums paid after default’’ before semicolon in cl. (C) of third sentence. 1945—Subsec. (g). Act Mar. 31, 1945, inserted provi- sions empowering Commissioner to insure mortgages without regard to any limitations upon time or aggre- gate amount contained in this subchapter. Statutory Notes and Related Subsidiaries CONSTRUCTION OF ACT MAY 26, 1942, WITH EX. ORD. NO. 9070, CONSOLIDATING NATIONAL HOUSING AGENCY Act May 26, 1942, ch. 319, § 12, 56 Stat. 305, provided that nothing contained in act May 26, 1942, was to be construed to supersede or be inconsistent with the pro- visions of Ex. Ord. No. 9070, Feb. 24, 1942. § 1744. Insurance of loans for manufacture of houses (a) Relief of housing shortage; advances In order to assist in relieving the acute short- age of housing which now exists and to promote the production of housing for veterans of World War II at moderate prices or rentals within their Page 816 TITLE 12—BANKS AND BANKING § 1744 reasonable ability to pay, through the applica- tion of modern industrial processes, the Sec- retary is authorized to insure loans to finance the manufacture of housing (including advances on such loans) when such loans are eligible for insurance as hereinafter provided. (b) Eligibility requirements Loans for the manufacture of houses shall be eligible for insurance under this section if at the time of such insurance, the Secretary deter- mines they meet the following conditions: (1) The manufacturer shall establish that binding purchase contracts have been executed satisfactory to the Secretary providing for the purchase and delivery of the houses to be man- ufactured, which contracts shall provide for the payment of the purchase price at such time as may be agreed to by the parties there- to, but, in no event, shall the purchase price be payable on a date in excess of thirty days after the date of delivery of such houses, un- less not less than 20 per centum of such pur- chase price is paid on or before the date of de- livery and the lender has accepted and dis- counted or has agreed to accept and discount, pursuant to subsection (i) of this section a promissory note or notes, executed by the pur- chaser, representing the unpaid portion of such purchase price, in which event such un- paid portion of the purchase price may be pay- able on a date not in excess of one hundred and eighty days from the date of delivery of such houses; (2) Such houses to be manufactured shall meet such requirements of sound quality, du- rability, livability, and safety as may be pre- scribed by the Secretary; (3) The borrower shall establish to the satis- faction of the Secretary that he has or will have adequate plant facilities, sufficient cap- ital funds, taking into account the loan ap- plied for, and the experience necessary, to achieve the required production schedule; (4) The loan shall involve a principal obliga- tion in an amount not to exceed 90 per centum of the amount which the Secretary estimates will be the necessary current cost, exclusive of profit, of manufacturing the houses, which are the subject of such purchase contracts as- signed to secure the loan, less any sums paid by the purchaser under said purchase con- tracts prior to the assignment thereof. The loan shall be secured by an assignment of the aforesaid purchase contracts and of all sums payable thereunder on or after the date of such assignment, with the right in the as- signee to proceed against such security in case of default as provided in the assignment, which assignment shall be in such form and contain such terms and conditions, as may be prescribed by the Secretary; and the Secretary may require such other agreements and under- takings to further secure the loan as he may determine, including the right, in case of de- fault or at any time necessary to protect the lender, to compel delivery to the lender of any houses then owned and in the possession of the borrower. The loan shall have a maturity not in excess of one year from the date of the note, except that any such loan may be refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe for an additional term not to exceed one year, and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the prin- cipal obligation outstanding at any time. (c) Release of security The Secretary may consent to the release of a part or parts of the property assigned or deliv- ered as security for the loan, upon such terms and conditions as he may prescribe and the secu- rity documents may provide for such release. (d) Payments; default; insurance benefits for mortgagee; prerequisites; value of mortgage The failure of the borrower to make any pay- ment due under or provided to be paid by the terms of a loan under this section, or the failure to perform any other covenant or obligation contained in any assignment, agreement, or un- dertaking executed by the borrower in connec- tion with such loan, shall be considered as a de- fault under this section, and if such default con- tinues for a period of thirty days, the lender shall be entitled to receive the benefits of the insurance hereinafter provided upon assignment, transfer, and delivery to the Secretary within a period and in accordance with the rules and reg- ulations prescribed by the Secretary of (1) all rights and interest arising with respect to the loan so in default; (2) all claims of the lender against the borrower or others arising out of the loan transaction; (3) any cash or property held by the lender, or to which it is entitled, as de- posits made for the account of the borrower and which have not been applied in reduction of the principal of the loan; and (4) all records, docu- ments, books, papers, and accounts relating to the loan transaction. Upon such assignment, transfer, and delivery, the Secretary shall, sub- ject to the cash adjustment provided for in sec- tion 1739(c) of this title, issue to the lender de- bentures having a face value equal to the unpaid principal balance of the loan. (e) Debentures; date of issuance; interest Debentures issued under this section shall be issued in accordance with the provisions of sec- tion 1739(d) of this title except that such deben- tures shall be dated as of the date of default as determined in subsection (d) of this section and shall bear interest from such date. (f) Applicability of other provisions The provisions of sections 1713(k) and 1738(a) of this title shall be applicable to loans insured under this section, except that as applied to such loans (1) the reference in section 1713(k) of this title to ‘‘subsection (g)’’ shall be construed to refer to ‘‘subsection (d)’’ of this section; (2) the references in section 1713(k) of this title to insured mortgages shall be construed to refer to the assignment or other security for loans in- sured under this section; and (3) the references in section 1738(a) of this title to a mortgage or mortgages shall be construed to include a loan or loans under this section. The provisions of section 1738(d) of this title shall also be applica- ble to loans insured under this section and the reference in section 1738(d) of this title to a Page 817 TITLE 12—BANKS AND BANKING § 1745 mortgage shall be construed to include a loan or loans with respect to which a contract of insur- ance is issued pursuant to this section. (g) Disposal of evidence of debt, contract, claim, personal property, or security; collection or compromise of obligations and rights Notwithstanding any other provision of law, the Secretary shall have the power to assign or sell at public or private sale, or otherwise dis- pose of, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of insurance heretofore or hereafter granted under this section, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in con- nection with the payment of such insurance until such time as such obligations may be re- ferred to the Attorney General for suit or collec- tion. (h) Premium charges; amount; manner of pay- ment; application fees The Secretary shall fix a premium charge for the insurance granted under this section, but such premium charge shall not exceed an amount equivalent to 1 per centum of the origi- nal principal of such loan, and such premium charge shall be payable in advance by the finan- cial institution and shall be paid at such time and in such manner as may be prescribed by the Secretary. In addition to the premium charge herein provided for, the Secretary is authorized to charge and collect such amounts as he may deem reasonable for examining and processing applications for the insurance of loans under this section, including such additional inspec- tions as the Secretary may deem necessary. (i) Insurance for accepting and discounting promissory notes; contract provisions; de- fault in payments; remedies; debentures; in- terest; premium charges (1) In addition to the insurance of the prin- cipal loan to finance the manufacture of hous- ing, as provided in this section, and in order to provide short-term financing in the sale of houses to be delivered pursuant to the purchase contract or contracts assigned as security for such principal loan, the Secretary is authorized, under such terms and conditions and subject to such limitations as he may prescribe, to insure the lender against any losses it may sustain re- sulting from the acceptance and discount of a promissory note or notes executed by a pur- chaser of any such houses representing an un- paid portion of the purchase price of any such houses. No such promissory note or notes ac- cepted and discounted by the lender pursuant to this subsection shall involve a principal obliga- tion in excess of 80 per centum of the purchase price of the manufactured house or houses; have a maturity in excess of one hundred and eighty days from the date of the note or bear interest in excess of 4 per centum per annum; nor may the principal amount of such promissory notes, with respect to any individual principal loan, outstanding and unpaid at any one time, exceed in the aggregate an amount prescribed by the Secretary. (2) The Secretary is authorized to include in any contract of insurance executed by him with respect to the insurance of a loan to finance the manufacture of houses, provisions to effectuate the insurance against any such losses under this subsection. (3) The failure of the purchaser to make any payment due under or provided to be paid by the terms of any note or notes executed by the pur- chaser and accepted and discounted by the lend- er under the provisions of this subsection, shall be considered as a default under this subsection, and if such default continues for a period of thir- ty days, the lender shall be entitled to receive the benefits of the insurance, as provided in sub- section (d) of this section except that debentures issued pursuant to this subsection shall have a face value equal to the unpaid principal balance of the loan plus interest at the rate of 4 per cen- tum per annum from the date of default to the date the application is filed for the insurance benefits. (4) Debentures issued with respect to the in- surance granted under this subsection shall be issued in accordance with the provisions of sec- tion 1739(d) of this title except that such deben- tures shall be dated as of the date application is filed for the insurance benefits and shall bear in- terest from such date. (5) The Secretary is authorized to fix a pre- mium charge for the insurance granted under this subsection, in addition to the premium charge authorized under subsection (h) of this section. Such premium charge shall not exceed an amount equivalent to 1 per centum of the original principal of such promissory note or notes and shall be paid at such time and in such manner as may be prescribed by the Secretary. (June 27, 1934, ch. 847, title VI, § 609, as added June 30, 1947, ch. 163, title I, § 3, 61 Stat. 193; amended Aug. 10, 1948, ch. 832, title I, § 101(d), 62 Stat. 1269; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 89–117, title XI, § 1108(r), Aug. 10, 1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.) Editorial Notes AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing in subsecs. (a), (b), (b)(1) to (4), (c), (d), (g), (h), and (i)(1), (2), (5). 1965—Subsec. (f). Pub. L. 89–117, struck out cl. (1) of the first sentence which provided that all references in section 1713(k) of this title to the ‘‘Housing Fund’’ shall be construed to refer to the ‘‘War Housing Insurance Fund’’ and redesignated cls. (2), (3), and (4) thereof as cls. (1), (2), and (3), respectively. 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. 1948—Subsec. (b). Act Aug. 10, 1948, § 101(d)(1), (2), struck out par. (1) and inserted new par. (1), and struck out first two sentences of par. (4) and inserted two new sentences. Subsec. (f). Act Aug. 10, 1948, § 101(d)(3), inserted last sentence. Subsec. (i). Act Aug. 10, 1948, § 101(d)(4), added subsec. (i). § 1745. Insurance of mortgages on sales of Gov- ernment housing; limits and conditions; Greenbelt towns; State housing Notwithstanding any of the provisions of this subchapter, the Secretary is authorized, upon