12 U.S.C. § 1715u — Authority to assist mortgagors in default

Page 637 TITLE 12—BANKS AND BANKING § 1715u 1 So in original. 1 So in original. Probably should be followed by a comma. 2 So in original. Probably should be ‘‘section 1710(a)(1)(A) of this title or subsection (c)),’’. ‘‘(C) establishing time deadlines or target dead- lines for required approvals; ‘‘(D) modifying division of approval authority be- tween field and national offices; ‘‘(E) improving outreach to project sponsors re- garding information that is required to be sub- mitted for such approvals; ‘‘(F) requesting additional funding for increasing staff, if necessary; and ‘‘(G) any other actions which would expedite ap- provals. Any such changes shall be made in a manner that provides for full compliance with any existing re- quirements under law or regulation that are designed to protect families receiving public and assisted housing assistance, including income targeting, rent, and fair housing provisions, and shall also comply with requirements regarding environmental review and protection and wages paid to laborers. ‘‘(b) CONSULTATION.—The Secretary shall consult with the Commissioner of the Internal Revenue Service and take such actions as are appropriate in conjunction with such consultation to simplify the coordination of rules, regulations, forms, and approval requirements for multifamily housing projects projects [sic] for which assistance is provided by such Department in conjunction with any low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 [26 U.S.C. 42] or tax-exempt housing bonds. ‘‘(c) RECOMMENDATIONS.—In implementing the changes required under this section, the Secretary shall solicit recommendations regarding such changes from project owners and sponsors, investors and stake- holders in housing tax credits, State and local housing finance agencies, public housing agencies, tenant advo- cates, and other stakeholders in such projects. ‘‘(d) REPORT.—Not later than the expiration of the 9- month period beginning on the date of the enactment of this Act [July 30, 2008], the Secretary shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Bank- ing, Housing, and Urban Affairs of the Senate that— ‘‘(1) identifies the actions taken by the Secretary to comply with this section; ‘‘(2) includes information regarding any resulting improvements in the expedited approval for multi- family housing projects; ‘‘(3) identifies recommendations made pursuant to subsection (c); ‘‘(4) identifies actions taken by the Secretary to implement the provisions in the amendments made by sections 2834 and 2835 of this Act [enacting this section and sections 1437z–8 and 11403f–1 of Title 42, The Public Health and Welfare, and amending sec- tions 1701q and 1715r of this title and sections 1437f, 3545, 11403g, 11403h, 11404, 11405, 11405b, 11406, 11407, and 11407b of Title 42]; and ‘‘(5) makes recommendations for any legislative changes that are needed to facilitate prompt approval of assistance for such projects.’’ § 1715t. Voluntary termination of insurance Notwithstanding any other provision of this chapter and with respect to any loan or mort- gage heretofore or hereafter insured under this chapter, except under section 1703 of this title and except as specified under section 1715z–15 of this title and subtitle B of the Emergency Low Income Housing Preservation Act of 1987,,1 the Secretary is authorized to terminate any insur- ance contract upon request by the borrower or mortgagor and the financial institution or mort- gagee and upon payment of such termination charge as the Secretary determines to be equi- table, taking into consideration the necessity of protecting the various insurance Funds. Upon such termination, borrowers and mortgagors and financial institutions and mortgagees shall be entitled to the rights, if any, to which they would be entitled under this chapter if the in- surance contract were terminated by payment in full of the insured loan or mortgage. (June 27, 1934, ch. 847, title II, § 229, as added Pub. L. 86–372, title I, § 113, Sept. 23, 1959, 73 Stat. 662; amended Pub. L. 87–70, title VI, § 612(l), June 30, 1961, 75 Stat. 183; Pub. L. 89–117, title XI, § 1108(k), Aug. 10, 1965, 79 Stat. 505; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 101–235, title II, § 202(d)(2), Dec. 15, 1989, 103 Stat. 2037.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables. The Emergency Low Income Housing Preservation Act of 1987, referred to in text, is title II of Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which, as amended by Pub. L. 101–625, is known as the Low-Income Hous- ing Preservation and Resident Homeownership Act of 1990. Subtitle B of title II, which was formerly set out as a note under section 1715l of this title and which amended section 1715z–6 of this title, was amended gen- erally by Pub. L. 101–625 and is classified generally to subchapter I (§ 4101 et seq.) of chapter 42 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 4101 of this title and Tables. AMENDMENTS 1989—Pub. L. 101–235 inserted ‘‘and except as specified under section 1715z–15 of this title and subtitle B of the Emergency Low Income Housing Preservation Act of 1987,’’ after ‘‘section 1703 of this title’’. 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing. 1965—Pub. L. 89–117 struck out ‘‘and Accounts’’ after ‘‘various Insurance Funds’’. 1961—Pub. L. 87–70 amended section generally, au- thorizing voluntary termination of insurance contracts with respect to loans insured under this chapter. § 1715u. Authority to assist mortgagors in default (a) Loss mitigation Upon default or imminent default, as defined by the Secretary 1 of any mortgage insured under this subchapter, mortgagees shall engage in loss mitigation actions for the purpose of pro- viding an alternative to foreclosure (including but not limited to actions such as special for- bearance, loan modification, preforeclosure sale, support for borrower housing counseling, subor- dinate lien resolution, borrower incentives, and deeds in lieu of foreclosure, as required, but not including assignment of mortgages to the Sec- retary under section 1710(a)(1)(A) of this title) or subsection (c),2 as provided in regulations by the Secretary. (b) Payment of partial claim (1) Establishment of program The Secretary may establish a program for payment of a partial claim to a mortgagee Page 638 TITLE 12—BANKS AND BANKING § 1715u that agrees to apply the claim amount to pay- ment of a mortgage on a 1- to 4-family resi- dence that is in default or faces imminent de- fault, as defined by the Secretary. (2) Payments and exceptions Any payment of a partial claim under the program established in paragraph (1) to a mortgagee shall be made in the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that— (A) the amount of the payment shall be in an amount determined by the Secretary, not to exceed an amount equivalent to 30 per- cent of the unpaid principal balance of the mortgage and any costs that are approved by the Secretary; (B) the amount of the partial claim pay- ment shall first be applied to any arrearage on the mortgage, and may also be applied to achieve principal reduction; (C) the mortgagor shall agree to repay the amount of the insurance claim to the Sec- retary upon terms and conditions acceptable to the Secretary; (D) the Secretary may permit compensa- tion to the mortgagee for lost income on monthly payments, due to a reduction in the interest rate charged on the mortgage; (E) expenses related to the partial claim or modification may not be charged to the bor- rower; (F) loans may be modified to extend the term of the mortgage to a maximum of 40 years from the date of the modification; and (G) the Secretary may permit incentive payments to the mortgagee, on the bor- rower’s behalf, based on successful perform- ance of a modified mortgage, which shall be used to reduce the amount of principal in- debtedness. (3) Payments in connection with certain activi- ties The Secretary may pay the mortgagee, from the appropriate insurance fund, in connection with any activities that the mortgagee is re- quired to undertake concerning repayment by the mortgagor of the amount owed to the Sec- retary. (c) Assignment and loan modification (1) 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 insured under this chapter. (B) Program requirements The Secretary may accept assignment of a mortgage under this paragraph only if— (i) the mortgage was in default or facing imminent default, as defined by the Sec- retary; (ii) the mortgagee has modified the mortgage to cure the default and provide for mortgage payments within the reason- able ability of the mortgagor to pay, at in- terest rates not exceeding current market interest rates; and (iii) the Secretary arranges for servicing of the assigned mortgage by a mortgagee (which may include the assigning mort- gagee) through procedures that the Sec- retary has determined to be in the best in- terests of the appropriate insurance fund. (C) Payment of insurance benefits Upon accepting assignment of a mortgage under this paragraph, the Secretary may pay insurance benefits to the mortgagee from the appropriate insurance fund, in an amount that the Secretary determines to be appropriate, not to exceed the amount nec- essary to compensate the mortgagee for the assignment and any losses and expenses re- sulting from the mortgage modification. (2) Assignment and loan modification (A) Authority The Secretary may encourage loan modi- fications for eligible delinquent mortgages or mortgages facing imminent default, as de- fined by the Secretary, through the payment of insurance benefits and assignment of the mortgage to the Secretary and the subse- quent modification of the terms of the mort- gage according to a loan modification ap- proved by the mortgagee. (B) Payment of benefits and assignment In carrying out this paragraph, the Sec- retary may pay insurance benefits for a mortgage, in the amount determined in ac- cordance with section 1710(a)(5) of this title, without reduction for any amounts modi- fied, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage specified in clauses (i) through (iv) of section 1710(a)(1)(A) of this title. (C) Disposition After modification of a mortgage pursuant to this paragraph, the Secretary may pro- vide insurance under this subchapter for the mortgage. The Secretary may subse- quently— (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. (D) Loan servicing In carrying out this paragraph, the Sec- retary may require the existing servicer of a mortgage assigned to the Secretary to con- tinue servicing the mortgage as an agent of the Secretary during the period that the Secretary acquires and holds the mortgage Page 639 TITLE 12—BANKS AND BANKING § 1715u for the purpose of modifying the terms of the mortgage, provided that the Secretary compensates the existing servicer appro- priately, as such compensation is deter- mined by the Secretary consistent, to the maximum extent possible, with section 1709(b) of this title. If the mortgage is resold pursuant to subparagraph (C)(iii), the Sec- retary may provide for the existing servicer to continue to service the mortgage or may engage another entity to service the mort- gage. (d) Prohibition of judicial review No decision by the Secretary to exercise or forego exercising any authority under this sec- tion shall be subject to judicial review. (e) Repealed. Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327 (f) Applicability of other laws No provision of this chapter, or any other law, shall be construed to require the Secretary to provide an alternative to foreclosure for mortga- gees with mortgages on 1- to 4-family residences insured by the Secretary under this chapter, or to accept assignments of such mortgages. (June 27, 1934, ch. 847, title II, § 230, as added Pub. L. 86–372, title I, § 114(a), Sept. 23, 1959, 73 Stat. 662; amended Pub. L. 88–560, title I, § 104(b), Sept. 2, 1964, 78 Stat. 770; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 96–399, title III, § 341, Oct. 8, 1980, 94 Stat. 1659; Pub. L. 98–181, title I [title IV, § 418], Nov. 30, 1983, 97 Stat. 1212; Pub. L. 100–242, title IV, § 428, Feb. 5, 1988, 101 Stat. 1918; Pub. L. 102–83, § 5(c)(2), Aug. 6, 1991, 105 Stat. 406; Pub. L. 104–99, title IV, § 407(b), Jan. 26, 1996, 110 Stat. 45; Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 105–276, title VI, § 601(f), Oct. 21, 1998, 112 Stat. 2674; Pub. L. 111–22, div. A, title II, § 203(d)(1)–(3), May 20, 2009, 123 Stat. 1645, 1646.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (c)(1)(A) and (f), was in the original ‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classifica- tion of this Act to the Code, see Tables. AMENDMENTS 2009—Subsec. (a). Pub. L. 111–22, § 203(d)(1)(C)–(E), in- serted ‘‘preforeclosure sale, support for borrower hous- ing counseling, subordinate lien resolution, borrower incentives,’’ after ‘‘loan modification,’’, ‘‘as required,’’ after ‘‘deeds in lieu of foreclosure,’’, and ‘‘or subsection (c),’’ before ‘‘as provided’’. Pub. L. 111–22, § 203(d)(1)(B), which directed substi- tution of ‘‘loan’’ for ‘‘loss’’, was executed by making the substitution before ‘‘modification’’ to reflect the probable intent of Congress. Pub. L. 111–22, § 203(d)(1)(A), inserted ‘‘or imminent default, as defined by the Secretary’’ after ‘‘default’’. Subsec. (b). Pub. L. 111–22, § 203(d)(2), amended subsec. (b) generally. Prior to amendment, text read as follows: ‘‘The Secretary may establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence that is in default. Any such payment under such program to the mortgagee shall be made in the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that— ‘‘(1) the amount of the payment shall be in an amount determined by the Secretary, not to exceed an amount equivalent to 12 of the monthly mortgage payments and any costs related to the default that are approved by the Secretary; and ‘‘(2) the mortgagor shall agree to repay the amount of the insurance claim to the Secretary upon terms and conditions acceptable to the Secretary. The Secretary may pay the mortgagee, from the appro- priate insurance fund, in connection with any activities that the mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed to the Secretary.’’ Subsec. (c). Pub. L. 111–22, § 203(d)(3)(A)–(C)(i), des- ignated existing provisions as par. (1), redesignated former pars. (1) to (3) as subpars. (A) to (C), respec- tively, of par. (1), and redesignated subpars. (A) to (C) of former par. (2) as cls. (i) to (iii), respectively, of par. (1)(B). Subsec. (c)(1)(B). Pub. L. 111–22, § 203(d)(3)(C)(ii), sub- stituted ‘‘under this paragraph’’ for ‘‘under a program under this subsection’’ in introductory provisions. Subsec. (c)(1)(B)(i). Pub. L. 111–22, § 203(d)(3)(C)(iii), inserted ‘‘or facing imminent default, as defined by the Secretary’’ after ‘‘default’’. Subsec. (c)(1)(C). Pub. L. 111–22, § 203(d)(3)(D), which directed substitution of ‘‘under this paragraph’’ for ‘‘under a program under this subsection’’, was executed by making the substitution for ‘‘under a program es- tablished under this subsection’’ to reflect the probable intent of Congress. Subsec. (c)(2). Pub. L. 111–22, § 203(d)(3)(E), added par. (2). Former par. (2) redesignated subpar. (B) of par. (1). 1998—Pub. L. 105–276 added subsec. (a) and redesig- nated former subsecs. (a) to (e) as (b) to (f), respec- tively. 1996—Pub. L. 104–99 amended section generally, sub- stituting subsecs. (a) to (e) relating to authority to as- sist mortgagors in default for former subsecs. (a) to (d) relating to temporary mortgage assistance payments and acquisition of mortgages to avoid foreclosures. Subsec. (d). Pub. L. 104–134 struck out heading and text of subsec. (d). Text read as follows: ‘‘Any mortgage for which the mortgagor has applied to the Secretary, before the date of enactment of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, for assignment pursuant to subsection (b) of this section as in effect before such date of enactment shall continue to be governed by the provisions of this section, as in effect immediately before such date of enactment.’’ 1991—Subsec. (a)(5). Pub. L. 102–83 substituted ‘‘sec- tion 3703(c) of title 38’’ for ‘‘section 1803(c) of title 38’’. 1988—Subsec. (a)(5). Pub. L. 100–242 substituted ‘‘The interest rate on payments made under this subsection shall be the rate established under section 1803(c) of title 38. The interest rate to be charged shall be deter- mined when the Secretary approves assistance under this subsection’’ for ‘‘The Secretary may establish in- terest charges on payments made under this sub- section; except that such charges shall not exceed a rate which is more than the maximum interest rate ap- plicable with respect to level payment mortgages in- sured pursuant to section 1709(b) of this title at the time assistance under this section is approved by the Secretary.’’ 1983—Subsec. (d). Pub. L. 98–181 struck out ‘‘, to the extent practicable,’’ after ‘‘Secretary shall’’. 1980—Subsec. (a). Pub. L. 96–399 added subsec. (a). Ex- isting undesignated provisions were designated as sub- sec. (b)(1). Subsec. (b). Pub. L. 96–399 designated existing undes- ignated provision as par. (1), made changes in phrase- ology which included applicability of remedy provided by subsection (a) of this section and determinations Page 640 TITLE 12—BANKS AND BANKING § 1715v 1 See References in Text note below. made pursuant to such subsection, and added pars. (2) and (3). Subsecs. (c), (d). Pub. L. 96–399 added subsecs. (c) and (d). 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing. 1964—Pub. L. 88–560 authorized the Commissioner to acquire the loan and security notwithstanding the fact that he has previously approved a request of the mort- gagee for an extension of the time for curing the de- fault and of the time for commencing foreclosure pro- ceedings or for otherwise acquiring title to the mort- gaged property or has approved a modification of the mortgage for the purpose of changing the amortization provisions by recasting the unpaid balance and sub- stituted provisions for acquisition of the loan and secu- rity upon payment of the insurance benefits in an amount equal to the unpaid principal balance of the loan plus any unpaid mortgage interest plus reimburse- ment for such costs and attorney’s fees as the Commis- sioner finds were properly incurred in connection with the defaulted mortgage and its assignment to the Com- missioner for former provision for such acquisition upon issuance to the mortgagee of debentures having a total face value equal to the unpaid principal balance of the loan plus any accrued interest. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–99 applicable with respect to mortgages insured under this chapter that are exe- cuted before, on, or after Oct. 1, 1997, see section 407(c) of Pub. L. 104–99, as amended, set out as a note under section 1710 of this title. SAVINGS PROVISION Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(1)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291, provided that: ‘‘Any mortgage for which the mortgagor has applied to the Secretary, before the date of enactment of this Act [Apr. 26, 1996], for assignment to the Secretary pursu- ant to section 230(b) of the National Housing Act [12 U.S.C. 1715u(b)] shall continue to be governed by the provisions of such section, as in effect immediately be- fore enactment of the Balanced Budget Downpayment Act, I [Pub. L. 104–99, which was approved Jan. 26, 1996].’’ IMPLEMENTATION OF 2009 AMENDMENT Pub. L. 111–22, div. A, title II, § 203(d)(4), May 20, 2009, 123 Stat. 1647, provided that: ‘‘The Secretary of Housing and Urban Development may implement the amend- ments made by this subsection [amending this section] through notice or mortgagee letter.’’ § 1715v. Insurance of mortgages for housing for elderly persons (a) Purpose; definitions The purpose of this section is to assist in re- lieving the shortage of housing for elderly per- sons and to increase the supply of rental housing for elderly persons. For the purposes of this section— (1) the term ‘‘housing’’ means eight or more new or rehabilitated living units, not less than 50 per centum of which are specially designed for the use and occupancy of elderly persons; (2) the term ‘‘elderly person’’ means any per- son, married or single, who is sixty-two years of age or over; and (3) the terms ‘‘mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’, and ‘‘maturity date’’ shall have the meanings respectively set forth in section 1713 of this title. (b) Authorization The Secretary is authorized to insure any mortgage (including advances on mortgages dur- ing construction) in accordance with the provi- sions of this section upon such terms and condi- tions as he may prescribe and to make commit- ments for insurance of such mortgages prior to the date of their execution or disbursement thereon. (c) Eligibility for insurance; maximum amount of mortgage; terms and conditions To be eligible for insurance under this section, a mortgage to provide housing for elderly per- sons shall— (1) Repealed. Pub. L. 93–383, title III, § 304(f), Aug. 22, 1974, 88 Stat. 678. (2)(A) not exceed, for such part of the prop- erty or project as may be attributable to dwelling use (excluding exterior land improve- ments as defined by the Secretary), $35,978 per family unit without a bedroom, $40,220 per family unit with one bedroom, $48,029 per fam- ily unit with two bedrooms, $57,798 per family unit with three bedrooms, and $67,950 per fam- ily unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discre- tion, increase the dollar amount limitations per family unit to not to exceed $40,876 per family unit without a bedroom, $46,859 per family unit with one bedroom, $56,979 per fam- ily unit with two bedrooms, $73,710 per family unit with three bedrooms, and $80,913 per fam- ily unit with four or more bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator- type structures of sound standards of con- struction and design; (B) the Secretary may, by regulation, increase any of the dollar limi- tations in subparagraph (A) (as such limita- tions may have been adjusted in accordance with section 1712a of this title) by not to ex- ceed 170 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the Sec- retary determines it necessary on a project- by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mort- gage Association in implementing its special assistance functions under section 1720 1 of this title (as such section existed immediately be- fore November 30, 1983) is involved; (C) the Secretary may, by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been adjusted in accordance with section 1712a of this title) by not to exceed 20 per centum if such increase is necessary to account for the increased cost of the project due to the installation therein of a solar energy system (as defined in subpara- graph (3) of the last paragraph of section 1703(a) of this title) or residential energy con- servation measures (as defined in section 8211(11)(A) through (G) and (I) of title 42) 1 in cases where the Secretary determines that