12 U.S.C. § 3706 — Notice of default and foreclosure sale;

Page 1557 TITLE 12—BANKS AND BANKING § 3706 section 3706(b) of this title may be applied at the discretion of the Secretary. (Pub. L. 97–35, title III, § 364, Aug. 13, 1981, 95 Stat. 423; Pub. L. 98–181, title I [title IV, § 471], Nov. 30, 1983, 97 Stat. 1237.) Editorial Notes AMENDMENTS 1983—Pub. L. 98–181 inserted provision relating to ap- plication of section 3706(b) of this title in event of fore- closure under other foreclosure procedures. § 3704. Foreclosure commissioner; designation, duties, etc. A foreclosure commissioner or commissioners designated pursuant to this chapter shall have a nonjudicial power of sale as provided in this chapter. Where the Secretary is the holder of a multifamily mortgage, the Secretary may des- ignate a foreclosure commissioner and, with or without cause, may designate a substitute fore- closure commissioner to replace a previously designated foreclosure commissioner, by exe- cuting a duly acknowledged, written designation stating the name and business or residential ad- dress of the commissioner or substitute commis- sioner. The designation shall be effective upon execution. Except as provided in section 3707(b) of this title, a copy of the designation shall be mailed with each copy of the notice of default and foreclosure sale served by mail in accord- ance with section 3708(1) of this title. The fore- closure commissioner, if a natural person, shall be a resident of the State in which the security property is located and, if not a natural person, the foreclosure commissioner must be duly au- thorized to transact business under the laws of the State in which the security property is lo- cated. The foreclosure commissioner shall be a person who is responsible, financially sound and competent to conduct the foreclosure. More than one foreclosure commissioner may be des- ignated. If a natural person is designated as foreclosure commissioner or substitute fore- closure commissioner, such person shall be des- ignated by name, except that where such person is designated in his or her capacity as an official or employee of the government of the State or subdivision thereof in which the security prop- erty is located, such person may be designated by his or her unique title or position instead of by name. The Secretary shall be a guarantor of payment of any judgment against the fore- closure commissioner for damages based upon the commissioner’s failure properly to perform the commissioner’s duties. As between the Sec- retary and the mortgagor, the Secretary shall bear the risk of any financial default by the foreclosure commissioner. In the event that the Secretary makes any payment pursuant to the preceding two sentences, the Secretary shall be fully subrogated to the rights satisfied by such payment. (Pub. L. 97–35, title III, § 365, Aug. 13, 1981, 95 Stat. 423.) § 3705. Prerequisites to foreclosure Foreclosure by the Secretary under this chap- ter of a multifamily mortgage may be com- menced, as provided in section 3707 of this title, upon the breach of a covenant or condition in the mortgage agreement for which foreclosure is authorized under the mortgage, except that no such foreclosure may be commenced unless any previously pending proceeding, judicial or non- judicial, separately instituted by the Secretary to foreclose the mortgage other than under this chapter has been withdrawn, dismissed, or oth- erwise terminated. No such separately insti- tuted foreclosure proceeding on the mortgage shall be instituted by the Secretary during the pendency of foreclosure pursuant to this chap- ter. Nothing in this chapter shall preclude the Secretary from enforcing any right, other than foreclosure, under applicable State law, includ- ing any right to obtain a monetary judgment. Nothing in this chapter shall preclude the Sec- retary from foreclosing under this chapter where the Secretary has obtained or is seeking any other remedy available pursuant to Federal or State law or under the mortgage agreement, including, but not limited to, the appointment of a receiver, mortgagee-in-possession status, re- lief under an assignment of rents, or transfer to a nonprofit entity pursuant to section 1701q of this title or section 8013 of title 42. (Pub. L. 97–35, title III, § 366, Aug. 13, 1981, 95 Stat. 424; Pub. L. 102–550, title V, § 517(c), Oct. 28, 1992, 106 Stat. 3792.) Editorial Notes AMENDMENTS 1992—Pub. L. 102–550 substituted ‘‘status, relief under an assignment of rents, or transfer to a nonprofit enti- ty pursuant to section 1701q of this title or section 8013 of title 42’’ for ‘‘status or relief under an assignment of rents’’ in last sentence. § 3706. Notice of default and foreclosure sale; condition and term of sale (a) The notice of default and foreclosure sale to be served in accordance with this chapter shall be subscribed with the name and address of the foreclosure commissioner and the date on which subscribed, and shall set forth the fol- lowing information: (1) the names of the Secretary, the original mortgagee and the original mortgagor; (2) the street address or a description of the location of the security property, and a de- scription of the security property, or so much thereof as is to be offered for sale, sufficient to identify the property to be sold; (3) the date of the mortgage, the office in which the mortgage is recorded, and the liber and folio or other description of the location of recordation of the mortgage; (4) the failure to make payment, including the due date of the earliest installment pay- ment remaining wholly unpaid as of the date the notice is subscribed, or the description of other default or defaults upon which fore- closure is based, and the acceleration of the secured indebtedness; (5) the date, time, and place of the fore- closure sale; (6) a statement that the foreclosure is being conducted pursuant to this chapter; (7) the types of costs, if any, to be paid by the purchaser upon transfer of title; and Page 1558 TITLE 12—BANKS AND BANKING § 3707 (8) the amount and method of deposit to be required at the foreclosure sale (except that no deposit shall be required of the Secretary), the time and method of payment of the bal- ance of the foreclosure purchase price and other appropriate terms of sale. (b)(1) Except as provided in paragraph (2)(A), the Secretary may require, as a condition and term of sale, that the purchaser at a foreclosure sale under this chapter agree to continue to op- erate the security property in accordance with the terms of the program under which the mort- gage insurance or assistance was provided, or any applicable regulatory or other agreement in effect with respect to such property imme- diately prior to the time of foreclosure sale. (2)(A) In any case where the majority of the residential units in a property subject to such a sale are occupied by residential tenants at the time of the sale, the Secretary shall require, as a condition and term of sale, any purchaser (other than the Secretary) to operate the prop- erty in accordance with such terms, as appro- priate, of the programs referred to in paragraph (1). (B) In any case where the Secretary is the pur- chaser of a multifamily project, the Secretary shall manage and dispose of such project in ac- cordance with the provisions of section 203 of the Housing and Community Development Amendments of 1978 [12 U.S.C. 1701z–11]. (Pub. L. 97–35, title III, § 367, Aug. 13, 1981, 95 Stat. 424; Pub. L. 102–550, title V, § 517(d), Oct. 28, 1992, 106 Stat. 3792.) Editorial Notes AMENDMENTS 1992—Subsec. (b)(1). Pub. L. 102–550 amended par. (1) generally. Prior to amendment, par. (1) read as follows: ‘‘Except as provided in paragraph (2)(A), the Secretary may require, as a condition and term of sale, that the purchaser at a foreclosure sale under this chapter agree to continue to operate the security property in accord- ance with the terms, as appropriate, of the loan pro- gram under section 312 of the Housing Act of 1964, the program under which insurance under title II of the Na- tional Housing Act was originally provided with re- spect to such property, or any applicable regulatory or other agreement in effect with respect to such property immediately prior to the time of foreclosure sale.’’ § 3707. Commencement of foreclosure; powers and duties of foreclosure commissioner or substitute (a) If the Secretary as holder of a multifamily mortgage determines that the prerequisites to foreclosure set forth in section 3705 of this title are satisfied, the Secretary may request the foreclosure commissioner to commence fore- closure of the mortgage. Upon such request, the foreclosure commissioner shall commence fore- closure of the mortgage, by commencing service of a notice of default and foreclosure sale in ac- cordance with section 3708 of this title. (b) Subsequent to commencement of a fore- closure under this chapter, the Secretary may designate a substitute foreclosure commissioner at any time up to forty-eight hours prior to the time of foreclosure sale, and the foreclosure shall continue without prejudice, unless the sub- stitute commissioner, in his or her sole discre- tion, finds that continuation of the foreclosure sale will unfairly affect the interests of the mortgagor. In the event that the substitute commissioner makes such a finding, the sub- stitute commissioner shall cancel the fore- closure sale, or adjourn such sale in the manner provided in section 3710(c) of this title. Upon designation of a substitute foreclosure commis- sioner, a copy of the written notice of such des- ignation referred to in section 3704 of this title shall be served upon the persons set forth in sec- tion 3708(1) of this title (1) by mail as provided in such section 3708 of this title (except that the minimum time periods between mailing and the date of foreclosure sale prescribed in such sec- tion shall not apply to notice by mail pursuant to this subsection), or (2) in any other manner, which in the substitute commissioner’s sole dis- cretion, is conducive to achieving timely notice of such substitution. In the event a substitute foreclosure commissioner is designated less than forty-eight hours prior to the time of the fore- closure sale, the pending foreclosure shall be terminated and a new foreclosure shall be com- menced by commencing service of a new notice of default and foreclosure sale. (Pub. L. 97–35, title III, § 368, Aug. 13, 1981, 95 Stat. 425.) § 3708. Service of notice of default and fore- closure sale The foreclosure commissioner shall serve the notice of default and foreclosure sale provided for in section 3706 of this title upon the fol- lowing persons and in the following manner, and no additional notice shall be required to be served notwithstanding any notice requirements of any State or local law— (1) The notice of default and foreclosure sale, together with the designation required by sec- tion 3704 of this title, shall be sent by certified or registered mail, postage prepaid and return receipt requested, to the following persons: (A) the current security property owner of record, as the record exists forty-five days prior to the date originally set for fore- closure sale, whether or not the notice de- scribes a sale adjourned as provided in this chapter; (B) the original mortgagor and all subse- quent mortgagors of record or other persons who appear of record or in the mortgage agreement to be liable for part or all of the mortgage debt, as the record exists forty- five days prior to the date originally set for foreclosure sale, whether or not the notice describes a sale adjourned as provided in this chapter, except any such mortgagors or per- sons who have been released; and (C) all persons holding liens of record upon the security property, as the record exists forty-five days prior to the date originally set for foreclosure sale, whether or not the notice describes a sale adjourned as provided in this chapter. Notice under clauses (A) and (B) of this para- graph shall be mailed at least twenty-one days prior to the date of foreclosure sale, and shall be mailed to the owner or mortgagor at the