12 U.S.C. § 1715z — Homeownership or membership in coop-

Page 655 TITLE 12—BANKS AND BANKING § 1715z 1 See References in Text note below. ment of insurance premiums, considering effect of said amendment, is actuarially sound, see section 201(g) of Pub. L. 97–253, set out as a note under section 1709 of this title. § 1715z. Homeownership or membership in coop- erative association for lower income families (a) Authorization for periodic assistance pay- ments to mortgagees; assistance to manufac- tured home buyers (1) For the purpose of assisting lower income families in acquiring homeownership or in ac- quiring membership in a cooperative association operating a housing project, the Secretary is au- thorized to make, and to contract to make, peri- odic assistance payments on behalf of such homeowners and cooperative members. The as- sistance shall be accomplished through pay- ments to mortgagees holding mortgages meet- ing the special requirements specified in this section or which mortgages are assisted under a State or local program providing assistance through loans, loan insurance or tax abatement. In making such assistance available, the Sec- retary shall give preference to low-income fami- lies who, without such assistance, would be like- ly to be involuntarily displaced (including those who would be likely to be displaced from rental units which are to be converted into a condo- minium project or a cooperative project). Such assistance may include the acquisition of a con- dominium or a membership in a cooperative as- sociation. (2)(A) Notwithstanding any other provision of this section, the Secretary is authorized to make periodic assistance payments under this section on behalf of families whose incomes do not exceed the maximum income limits pre- scribed pursuant to subsection (h)(2) of this sec- tion for the purpose of assisting such families in acquiring ownership of a manufactured home consisting of two or more modules and a lot on which such manufactured home is or will be sit- uated, except that periodic assistance payments pursuant to this paragraph shall not be made with respect to more than 20 per centum of the total number of units with respect to which as- sistance is approved under this section after January 1, 1976. Assistance payments under this section pursuant to this paragraph shall be ac- complished through payments on behalf of an owner of lower-income of a manufactured home as described in the preceding sentence to the fi- nancial institution which makes the loan, ad- vance of credit, or purchase of an obligation rep- resenting the loan or advance of credit to fi- nance the purchase of the manufactured home and the lot on which such manufactured home is or will be situated, but only if insurance under section 1703 of this title covering such loan, ad- vance of credit, or obligation has been granted to such institution. (B) Notwithstanding the provisions of sub- section (c) of this section, assistance payments provided pursuant to this paragraph shall be in an amount not exceeding the lesser of— (i) the balance of the monthly payment for principal, interest, real and personal property taxes, insurance, and insurance premium chargeable under section 1703 of this title due under the loan or advance of credit remaining unpaid after applying 20 per centum of the manufactured homeowner’s income; or (ii) the difference between the amount of the monthly payment for principal, interest, and insurance premium chargeable under section 1703 of this title which the manufactured homeowner is obligated to pay under the loan or advance of credit and the monthly payment of principal and interest which the owner would be obligated to pay if the loan or ad- vance of credit were to bear interest at a rate derived by subtracting from the interest rate applicable to such loan or advance of credit the interest rate differential between the max- imum interest rate plus mortgage insurance premium applicable to mortgages insured under subsection (i) of this section at the time such loan or advance of credit is made and the interest rate which such mortgages are pre- sumed, under regulations prescribed by the Secretary, to bear for purposes of subsection (c)(2) of this section. (b) Qualifications and eligibility requirements for assistance payments To qualify for assistance payments, the home- owner or the cooperative member shall be of lower income and satisfy eligibility require- ments prescribed by the Secretary, and— (1) the homeowner shall be a mortgagor under a mortgage which meets the require- ments of and is insured under subsection (i) or (j)(4) of this section: Provided, That a mort- gage meeting the requirements of subsection (i)(3)(A) of this section but insured under sec- tion 1715z–2 of this title may qualify for assist- ance payments if such mortgage was executed by a mortgagor who is determined not to be an acceptable credit risk for mortgage insurance purposes (but otherwise eligible) under sub- section (j)(4) of this section or under section 1715l(d)(2) or 1715y(c) of this title and accepted as a reasonably satisfactory credit risk under section 1715z–2 1 of this title; or (2) the cooperative association of which the family is a member shall operate (A) a housing project the construction or substantial reha- bilitation of which has been financed with a mortgage insured under section 1715e or sec- tion 1715l(d)(3) of this title and which has been completed within two years prior to the filing of the application for assistance payments and the dwelling unit has had no previous occu- pant other than the family: Provided, That if any cooperative member who has received as- sistance payments transfers his membership and occupancy rights to another person who satisfies the eligibility requirements pre- scribed by the Secretary and undertakes the obligation to pay occupancy charges, the new cooperative member may qualify for assist- ance payments upon the filing of an applica- tion with respect to the dwelling unit involved to be occupied by him: Provided further, That assistance payments may be made with re- spect to a dwelling unit in an existing cooper- ative project which meets such standards as the Secretary may prescribe, if the family qualifies as a displaced family as defined in Page 656 TITLE 12—BANKS AND BANKING § 1715z section 1715l(f) of this title, or a family which includes five or more minor persons, or a fam- ily occupying low-rent public housing: Pro- vided further, That the amount of the mort- gage attributable to the dwelling unit shall in- volve a principal obligation not in excess of $40,000 ($47,500 in any geographical area where the Secretary authorizes an increase on the basis of a finding that costs levels so require), except that with respect to any family with five or more persons the foregoing limits shall be $47,500 and $55,000, respectively; or (B) a housing project which is financed under a State or local program providing assistance through loans, loan insurance, or tax abate- ments, and which prior to completion of con- struction or rehabilitation is approved for re- ceiving the benefits of this section. (c) Limitation on payments on behalf of mort- gagor; occupancy of property; maximum amount of payment; recapture of amounts; determination, applicability, etc. (1) Subject to the second sentence of this para- graph, the assistance payments to a mortgagee by the Secretary on behalf of a mortgagor shall be made during such time as the mortgagor shall continue to occupy the property which se- cures the mortgage: Provided, That assistance payments may be made on behalf of a home- owner who assumes a mortgage insured under subsection (i) or (j)(4) with respect to which as- sistance payments have been made on behalf of the previous owner, if the homeowner is ap- proved by the Secretary as eligible for receiving such assistance: Provided further, That the Sec- retary is authorized to continue making such as- sistance payments where the mortgage has been assigned to the Secretary. Assistance payments pursuant to any new contract, other than a con- tract in connection with a refinancing under subsection (r), entered into after September 30, 1983, that utilizes authority approved in appro- priation Acts for any fiscal year beginning after such date may not be made for more than a 10- year period. The payment shall be in an amount not exceeding the lesser of— (A) the balance of the monthly payment for principal, interest, taxes, insurance, and mort- gage insurance premium due under the mort- gage remaining unpaid after applying 20 per centum of the mortgagor’s income; or (B) the difference between the amount of the monthly payment for principal, interest and mortgage insurance premium which the mort- gagor is obligated to pay under the mortgage and the monthly payment for principal and in- terest which the mortgagor would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum (4 per cen- tum per annum in the case of a mortgage de- scribed in subsection (o)). (2)(A) Upon disposition by the homeowner of any property assisted pursuant to this section or where the homeowner rents such a property (or the owner’s unit in the case of a two- to four- family property) for a period longer than one year, the Secretary shall provide for the recap- ture of an amount equal to the lesser of (i) the amount of assistance actually received under this section, other than any amount provided under subsection (e), or (ii) an amount equal to at least 50 per centum of the net appreciation of the property, as determined by the Secretary. For the purpose of this paragraph, the term ‘‘net appreciation of the property’’ means any in- crease in the value of the property over the original purchase price, less the reasonable costs of sale, the reasonable costs of improvements made to the property, and any increase in the mortgage amount as of the time of sale over the original mortgage balance due to the mortgage being insured pursuant to section 1715z–10 1 of this title. Notwithstanding any other provision of law, any such assistance shall constitute a debt secured by the property to the extent that the Secretary may provide for such recapture. (B) Subparagraph (A) does not apply to any property with respect to which there is assump- tion in accordance with paragraph (1) of this subsection or to any property which is subject to a mortgage, loan, or other advance of credit insured pursuant to subsection (q). (3)(A) There hereby is established in the Treas- ury of the United States a fund, which, to the extent approved in appropriation Acts, may be used by the Secretary for purposes of carrying out subparagraph (B). There shall be deposited into such fund (i) any amount recaptured under paragraph (2); (ii) any authority to make assist- ance payments under subsection (a) that is com- mitted for use in a contract but is unused be- cause the mortgage, loan, or advance of credit involved is refinanced (except to the extent pro- vided in subsection (r) for mortgages insured under such subsection) or because such assist- ance payments are terminated or suspended for other reasons before the original termination date of such contract; and (iii) any amount re- ceived under subparagraph (C). (B) In the case of any homeowner whose assist- ance payments are terminated by reason of the 10-year limitation referred to in paragraph (1), and who is determined by the Secretary to be unable to assume the full payments due under the mortgage, loan, or advance of credit in- volved, the Secretary shall, to the extent of the availability of amounts in the fund established in subparagraph (A), contract to make, and make, continued assistance payments on behalf of such homeowner. Such continued assistance payments shall be made in an amount deter- mined in accordance with the applicable provi- sions of paragraph (1) or subsection (a)(2)(B) and for such period as the Secretary determines to be appropriate. (C) Any amounts in such fund determined by the Secretary to be in excess of the amounts currently required to carry out the provisions of subparagraph (B) shall be invested by the Sec- retary in obligations of, or obligations guaran- teed as to both principal and interest by, the United States or any agency of the United States. Notwithstanding the preceding sentence, any amounts of budget authority or contract au- thority recaptured from assistance payments contracts relating to mortgages that are being refinanced that are not required for assistance payments contracts relating to mortgages in- sured under this subsection, shall be rescinded. Page 657 TITLE 12—BANKS AND BANKING § 1715z (d) Limitation on payments on behalf of family holding membership in cooperative associa- tion; occupancy; maximum amount of pay- ment Assistance payments to a mortgagee by the Secretary on behalf of a family holding member- ship in a cooperative association operating a housing project shall be made only during such time as the family is an occupant of such proj- ect and shall be in amounts computed on the basis of the formula set forth in subsection (c) applying the cooperative member’s propor- tionate share of the obligations under the project mortgage to the items specified in the formula. (e) Reimbursement for expenses in handling the mortgage The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (a)(2)(B), (c), (d), (j)(7), or (r), as he deems appropriate to re- imburse the mortgagee for its expenses in han- dling the mortgage. (f) Adoption of procedures for recertifications of mortgagor’s or cooperative member’s income Procedures shall be adopted by the Secretary for recertifications of the mortgagor’s (or coop- erative member’s) income at intervals of two years (or at shorter intervals where the Sec- retary deems it desirable) for the purpose of ad- justing the amount of such assistance payments within the limits of the formula described in subsection (c). (g) Regulations to assure that sales price or other consideration paid is not increased above appraised value The Secretary shall prescribe such regulations as he deems necessary to assure that the sales price of, or other consideration paid in connec- tion with, the purchase by a homeowner of the property with respect to which assistance pay- ments are to be made is not increased above the appraised value on which the maximum mort- gage which the Secretary will insure is com- puted. (h) Authorization of appropriations; aggregate amount of assistance payment contracts; maximum income limits of families; limita- tion on payments with respect to existing dwellings or dwelling units in existing projects and for approved substantial reha- bilitation of dwellings or dwelling units in projects (1) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section, including such sums as may be necessary to make the assistance pay- ments under contracts entered into under this section. The aggregate amount of outstanding contracts to make such payments shall not ex- ceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be in- creased by $125,000,000 on July 1, 1969, by $150,000,000 on July 1, 1970, by $200,000,000 on July 1, 1971, by such sums as may be approved in ap- propriation Acts after June 30, 1974, and prior to July 1, 1976, and by such sums as may be ap- proved in an appropriation Act on or after Octo- ber 1, 1983 (from the additional authority to enter into contracts made available on such date under the first sentence of section 1437c(c)(1) of title 42). The aggregate amount that may be obligated over the duration of the contracts entered into with the authority pro- vided on or after October 1, 1983 (other than obli- gations in connection with mortgages insured under subsection (r)), may not exceed such sums of new budget authority as may be appropriated after November 30, 1983. The Secretary shall begin issuing new commitments and reserva- tions to provide mortgage insurance and assist- ance payments under this section before the ex- piration of the 30-day period following the ap- proval in any appropriation Act of budget au- thority for this section after November 30, 1983. Upon the expiration of one year following Au- gust 22, 1974, the Secretary shall not enter into new contracts for assistance payments under this section utilizing authority approved in ap- propriation Acts prior to July 1, 1974. The Sec- retary shall not enter into new contracts for as- sistance payments under this section (except under subsection (r)) after May 20, 1983, utilizing amounts approved in appropriation Acts before November 30, 1983, except (i) pursuant to a firm commitment issued on or before May 20, 1983, (ii) pursuant to other commitments issued by the Secretary prior to June 30, 1981, reserving funds for housing to be assisted under this sec- tion where such housing is included in a project pursuant to section 119 of the Housing and Community Development Act of 1974 [42 U.S.C. 5318], or (iii) pursuant to other commit- ments issued on or before September 30, 1981, where housing under this section is to be devel- oped on land which was municipally owned on September 30, 1981, and where a local govern- ment contributes at least $1,000 per unit of funds obtained under title I of the Housing and Com- munity Development Act of 1974 [42 U.S.C. 5301 et seq.] and at least $2,000 per unit of additional funds to assist housing under this section. In no event may the Secretary enter into any new contract for assistance payments under this sec- tion (other than a contract in connection with a mortgage insured under subsection (r)) after September 30, 1989. (2) Assistance payments under this section may be made only with respect to a family whose income at the time of initial occupancy does not exceed 95 per centum of the median in- come for the area, as determined by the Sec- retary with adjustments for smaller and larger families, except that the Secretary may estab- lish income ceilings higher or lower than 95 per centum of the median for the area on the basis of his findings that such variations are nec- essary because of prevailing levels of construc- tion costs, unusually high or low median family incomes, or other factors. (3) Notwithstanding the provisions of sub- sections (b)(2) and (i)(3)(A) with respect to the prior construction or rehabilitation of a dwell- ing, or of the project in which there is a dwell- ing unit, for which assistance payments may be made, and notwithstanding the provisions of subsection (j)(1) authorizing the purchase of Page 658 TITLE 12—BANKS AND BANKING § 1715z housing which is neither deteriorating nor sub- standard, not more than— (A) 25 per centum of the total amount of contracts for assistance payments authorized by appropriation Acts to be made prior to July 1, 1969, and (B) 30 per centum of the total additional amount of contracts for assistance payments authorized by appropriation Acts to be made on or after July 1, 1969, may be made with respect to existing dwellings, or dwelling units in existing projects. The pre- ceding sentence shall not apply to contracts in connection with mortgages insured under sub- section (r). (4) At least 10 per centum of the total amount of contracts for assistance payments authorized by appropriation Acts to be made after June 30, 1971, shall be available for use only with respect to dwellings, or dwelling units in projects, which are approved by the Secretary prior to substan- tial rehabilitation. (i) Insurance of mortgages executed by mortga- gors meeting eligibility requirements for as- sistance payments; issuance of commitment; eligibility requirements for insurance (1) The Secretary is authorized, upon applica- tion by the mortgagee, to insure a mortgage (in- cluding advances with respect to property con- struction or rehabilitation pursuant to a self- help program) executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the Sec- retary prior to the date of their execution or disbursement thereon, upon such terms and con- ditions as the Secretary may prescribe. (2) To be eligible for insurance under this sub- section, a mortgage shall meet the requirements of section 1715l(d)(2) or 1715y(c) of this title, ex- cept as such requirements are modified by this subsection. (3) A mortgage to be insured under this sub- section shall— (A) involve a single-family or a two-family dwelling which has been approved by the Sec- retary prior to the beginning of construction or substantial rehabilitation, or a three-fam- ily dwelling which is approved by the Sec- retary prior to the beginning of substantial re- habilitation, or a one-family unit in a condo- minium project (together with an undivided interest in the common areas and facilities serving the project) which is released from a multi-family project, the construction or sub- stantial rehabilitation of which has been com- pleted within two years prior to the filing of the application for assistance payments with respect to such family unit and the unit has had no previous occupant other than the mort- gagor: Provided, That the mortgage may in- volve an existing dwelling or a family unit in an existing condominium project which meets such standards as the Secretary may pre- scribe: Provided further, That the mortgage may involve an existing dwelling or a family unit in an existing condominium project if as- sistance payments have been made on behalf of the previous owner of the dwelling or family unit with respect to a mortgage insured under subsection (j)(4): Provided further, That the mortgage may involve a dwelling unit in an existing project covered by a mortgage insured under section 1715z–1 of this title or in an ex- isting project receiving the benefits of finan- cial assistance under section 101 of the Hous- ing and Urban Development Act of 1965 [12 U.S.C. 1701s]; (B) where it is to cover a one-family unit in a condominium project, have a principal obli- gation not exceeding $40,000 ($47,500 in any geographical area where the Secretary author- izes an increase on the basis of a finding that cost levels so require), except that with re- spect to any family with five or more persons the foregoing limits shall be $47,500 and $55,000, respectively; (C) involve, in the case of a dwelling unit other than a condominium or cooperative unit, a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed $40,000 ($47,500 in any geographical area where the Secretary au- thorizes an increase on the basis of a finding that cost levels so require), except that with respect to any family with five or more per- sons the foregoing limits shall be $47,500 and $55,000, respectively; (D) involve, in the case of a two-family or three-family dwelling, a principal obligation (including such initial service charges, ap- praisal, inspection, and other fees as the Sec- retary shall approve) in an amount not to ex- ceed $60,000 ($66,250 in any geographical area where the Secretary authorizes an increase on the basis of a finding that cost levels so re- quire); (E) be executed by a mortgagor who shall have paid in cash or its equivalent, on account of the property, at least an amount equal to 3 per centum of the Secretary’s estimate of the cost of acquisition (excluding the mortgage in- surance premium paid at the time the mort- gage is insured); and (F) bear interest at a rate not to exceed such percent per annum on the amount of the prin- cipal obligation outstanding at any time as the Secretary finds necessary to meet the mortgage market, taking into consideration the yields on mortgages in the primary and secondary markets. (4) In insuring eligible mortgages under this subsection, the Secretary may not deny insur- ance on the basis that a mortgage involves a two- to three-family dwelling or is to be used to finance substantial rehabilitation rather than new construction. (5) As a condition of insuring a mortgage on a two- to three-family dwelling, the Secretary shall require the mortgagor (A) not to discrimi- nate against prospective tenants on the basis of their receipt of or eligibility for housing assist- ance under any Federal, State or local housing assistance program and (B) to agree that during the term of the mortgage each of the rental units shall be occupied by, or available for occu- pancy by, persons and families whose incomes do not exceed 100 per centum of the area median income. Page 659 TITLE 12—BANKS AND BANKING § 1715z (j) Insurance of mortgages executed by nonprofit organizations or public bodies or agencies; issuance of commitment; eligibility require- ments for insurance; insurance of mortgages executed to finance sale of individual dwell- ings to lower income individuals or families; definitions; assistance payments to mortga- gees on behalf of nonprofit organizations or public bodies and agencies (1) In addition to mortgages insured under the provisions of subsection (i), the Secretary is au- thorized, upon application by the mortgagee, to insure a mortgage (including advances under such mortgage during rehabilitation) which is executed by a nonprofit organization or public body or agency to finance the purchase of hous- ing, and the rehabilitation of such housing if it is deteriorating or substandard, for subsequent resale to lower income home purchasers who meet the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the Sec- retary prior to the date of their execution or disbursement thereon, upon such terms and con- ditions as the Secretary may prescribe. (2) To be eligible for insurance under para- graph (1) of this subsection, a mortgage shall— (A) be executed by a private nonprofit orga- nization or public body or agency, approved by the Secretary, for the purpose of financing the purchase (with the intention of subsequent re- sale), and rehabilitation where the housing in- volved is deteriorating or substandard, of property comprising one or more tracts or par- cels, whether or not contiguous, consisting of (i) four or more single-family dwellings of de- tached, semidetached, or row construction, or (ii) four or more one-family units in a struc- ture or structures for which a plan of family unit ownership approved by the Secretary is established; except that in a case not involv- ing the rehabilitation of deteriorating or sub- standard housing the property purchased may consist of one or more such dwellings or units; (B) be in a principal amount not exceeding the appraised value of the property at the time of its purchase under the mortgage plus the estimated cost of any rehabilitation; (C) bear interest at a rate not to exceed such percent per annum on the amount of the prin- cipal obligation outstanding at any time as the Secretary determines is necessary to meet the mortgage market, taking into consider- ation the yields on mortgages in the primary and secondary markets; (D) provide for complete amortization (sub- ject to paragraph (4)(E)) by periodic payments within such term as the Secretary may pre- scribe; and (E) provide for the release of individual sin- gle-family dwellings from the lien of the mort- gage upon their sale in accordance with para- graph (4). (3) No mortgage shall be insured under para- graph (1) unless the mortgagor shall have dem- onstrated to the satisfaction of the Secretary that (A) the property involved is located in a neighborhood which is sufficiently stable and contains sufficient public facilities and amen- ities to support long-term values, or (B) the pur- chase or rehabilitation of such property plus the mortgagor’s related activities and the activities of other owners of housing in the neighborhood, together with actions to be taken by public au- thorities, will be of such scope and quality as to give reasonable promise that a stable environ- ment will be created in the neighborhood. (4)(A) No mortgage shall be insured under paragraph (1) unless the mortgagor enters into an agreement, satisfactory to the Secretary, that it will offer to sell the dwellings involved, after purchase and upon completion of any reha- bilitation, to lower income individuals or fami- lies meeting the eligibility requirements estab- lished by the Secretary under subsection (b). (B) The Secretary is authorized to insure under this paragraph mortgages executed to fi- nance the sale of individual dwellings to lower income purchasers as provided in subparagraph (A). Any such mortgage shall— (i) be in a principal amount not in excess of that portion of the unpaid principal balance of the blanket mortgage covering the property which is allocable to the individual dwelling involved; (ii) bear interest at the same rate as the blanket mortgage; and (iii) provide for complete amortization by periodic payments within a term equal to the remaining term (determined without regard to subparagraph (E)) of such blanket mortgage. (C) The price for which any individual dwell- ing is sold under this paragraph shall be in an amount equal to that portion of the unpaid prin- cipal balance of the blanket mortgage covering the property which is allocable to the dwelling plus such additional amount, not less than $200 (which may be applied in whole or in part to- ward closing costs and may be paid in cash or its equivalent), as the Secretary may determine to be reasonable. (D) Upon the sale under this paragraph of any individual dwelling, such dwelling shall be re- leased from the lien of the blanket mortgage. Until all of the individual dwellings in the prop- erty covered by the blanket mortgage have been sold, the mortgagor shall hold and operate the dwellings remaining unsold at any given time, in such manner and under such terms as the Secretary may prescribe, as though they con- stituted rental units. (E) Upon the sale under this paragraph of all the individual dwellings in the property covered by the blanket mortgage and the release of all individual dwellings from the lien of the blanket mortgage, the insurance of the blanket mort- gage shall be terminated and no adjusted pre- mium charge shall be charged by the Secretary upon such termination. (5) Where the Secretary has approved a plan of family unit ownership the terms ‘‘single-family dwelling’’, ‘‘single-family dwellings’’, ‘‘indi- vidual dwelling’’, and ‘‘individual dwellings’’ shall mean a family unit or family units, to- gether with the undivided interest (or interests) in the common areas and facilities. (6) For purposes of this subsection, the terms ‘‘single-family dwelling’’ and ‘‘single-family dwellings’’ (except for purposes of paragraph (5)) shall include a two- to three-family dwelling which has been approved by the Secretary. Page 660 TITLE 12—BANKS AND BANKING § 1715z (7) In addition to the assistance payments au- thorized under subsection (b), the Secretary may make such payments to a mortgagee on be- half of a nonprofit organization or public body or agency which is a mortgagor under the provi- sions of paragraph (1) in an amount not exceed- ing the difference between the monthly payment for principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage and the monthly pay- ment for principal and interest such mortgagor would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum. (8) A mortgage covering property which is not deteriorating or substandard may be insured under this subsection only if it is situated in an area in which mortgages may be insured under section 1715l(h) of this title. (9) In insuring eligible mortgages under this subsection, the Secretary may not deny insur- ance on the basis that a mortgage involves a two- to three-family dwelling or is to be used to finance substantial rehabilitation rather than new construction. (k) Allocation and transfer of reasonable portion of total authority to contract to make assist- ance payments to Secretary of Agriculture for use in rural areas and small towns The Secretary shall from time to time allo- cate and transfer to the Secretary of Agri- culture, for use (in accordance with the terms and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to make assistance pay- ments as approved in appropriation Acts under subsection (h)(1). (l) Deductions for minors in determining income limits; exclusion of earnings of minors In determining the income of any person for the purposes of this section, there shall be de- ducted an amount equal to $300 for each minor person who is a member of the immediate family of such person and living with such family, and the earnings of any such minor person shall not be included in the income of such person or his family. (m) Termination date for insurance of mortgages No mortgage (except a mortgage insured under subsection (r)) shall be insured under this sec- tion after September 30, 1989, except pursuant to a commitment to insure before that date. (n) Percentage limitation of mortgage insurance on subdivision units; exceptions No mortgage may be insured under this sec- tion on a unit in a subdivision, after October 12, 1977, which, when added to any other mortgages insured under this section in that subdivision after such date, represents more than 40 per cen- tum of the total number of units in the subdivi- sion, except that the preceding limitation shall not apply with regard to any rehabilitated unit, or to any unit or subdivision located or to be lo- cated in an established urban neighborhood or area, where a sound proposal is involved and where an aggregation of subsidized units is es- sential to a community sponsored overall rede- velopment plan, as determined by the Secretary or to a mortgage insured under subsection (r). (o) Mortgage insurance over maximum limits in- volving dwellings of community sponsored programs of concentrated redevelopment or revitalization The Secretary may insure a mortgage under this section involving a principal obligation which exceeds, by not more than 20 per centum, the maximum limits specified under subsection (b)(2) or (i)(3) of this section if the mortgage re- lates to a dwelling in an urban neighborhood where the Secretary determines that a commu- nity sponsored program of concentrated redevel- opment or revitalization is being undertaken and the Secretary determines that such action is necessary to enable eligible families residing in the area who occupy substandard housing or are being involuntarily displaced to remain in the area in decent, safe, and sanitary housing. (p) Mortgage insurance over maximum limits in- volving dwellings to be occupied by phys- ically handicapped persons; applicability, etc. The Secretary may insure a mortgage under this section involving a principal obligation which exceeds, by not more than 10 per centum, the maximum limits specified under subsection (b)(2) or (i)(3) of this section, or, if applicable, the maximum principal obligation insurable pursuant to subsection (o) of this section, if the mortgage relates to a dwelling to be occupied by a physically handicapped person and the Sec- retary determines that such action is necessary to reflect the cost of making such dwelling ac- cessible to and usable by such person. (q) Periodic assistance payments for emergency stimulation of housing market; contracts, terms and conditions, eligibility, etc., for pay- ments (1) Notwithstanding any other provision of this section, except subsection (n), if the Sec- retary determines that there is a substantial need for emergency stimulation of the housing market, the Secretary is authorized to make and enter into contracts to make periodic as- sistance payments, to the extent of not to ex- ceed 75 per centum of the authority available pursuant to subsection (h)(1), on behalf of home- owners, including owners of manufactured homes, to mortgagees or other lenders holding mortgages, loans, or advances of credit which meet the requirements of this subsection. The Secretary may establish such criteria, terms, and conditions relating to homeowners and mortgages, loans, or advances of credit assisted under this subsection as the Secretary deems appropriate, consistent with the provisions of this subsection. The Secretary is authorized to insure a mortgage which meets the require- ments of and is to be assisted under this sub- section. The authority to enter into contracts to provide assistance payments and to insure mort- gages under this subsection shall terminate on September 30, 1989, or at such earlier date as the Secretary may deem appropriate, upon a deter- mination by the Secretary that the conditions which gave rise to the exercise of authority under this subsection are no longer present, ex- cept pursuant to a commitment entered into prior to such date. Page 661 TITLE 12—BANKS AND BANKING § 1715z (2) Payments under this subsection may be made only on behalf of a homeowner who satis- fies such eligibility requirements as may be pre- scribed by the Secretary and who— (A)(i) is a mortgagor under a mortgage which meets the requirements of and is in- sured under this subsection, or (ii) is the origi- nal owner of a new manufactured home con- sisting of two or more modules and a lot on which the manufactured home is situated, where insurance under section 1703 of this title covering the loan, advance of credit, or pur- chase of an obligation representing such loan or advance of credit to finance the purchase of such manufactured home and lot has been granted to the lender making such loan, ad- vance of credit, or purchase of an obligation; and (B) has a family income, at the time of ini- tial occupancy, which does not exceed 130 per centum of the area median income for the area (with adjustments for smaller and larger fami- lies, unusually high or low median family in- come, or other factors), as determined by the Secretary. (3) Assistance payments to a mortgagee or other lender by the Secretary on behalf of a homeowner shall be made only during such time as the homeowner shall continue to occupy the property which secures the mortgage, loan, or advance of credit. The Secretary may, where a mortgage insured under this subsection has been assigned to the Secretary, continue making such assistance payments. (4) The amount of the assistance payments in the case of a mortgage shall not at any time ex- ceed the lesser of— (A) the balance of the monthly payment for principal, interest, taxes, insurance, and any mortgage insurance premium due under the mortgage remaining unpaid after applying a minimum of 25 per centum of the mortgagor’s income, except that the Secretary may reduce such per centum of income to the extent he deems necessary, but not lower than 20 per centum of the mortgagor’s income; or (B) the difference between the amount of the monthly payment for principal, interest, and any mortgage insurance premium which would be required if the mortgage were a level pay- ment mortgage bearing interest at a rate equal to the maximum interest rate which is applicable to level payment mortgages insured under section 1709(b) of this title, other than mortgages subject to section 1709–1(2) 1 of this title, and the monthly payment for principal and interest which the mortgagor would be ob- ligated to pay if the mortgage were a level payment mortgage bearing interest at the rate of at least 91⁄2 per centum per annum. (5) Assistance payments on behalf of the owner of a manufactured home shall not at any time exceed the lesser of— (A) the balance of the monthly payment for principal, interest, real and personal property taxes, insurance, and insurance premium chargeable under section 1703 of this title due under the loan or advance of credit remaining unpaid after applying a minimum of 25 per centum of the manufactured homeowner’s in- come, except that the Secretary may reduce such per centum of income to the extent he deems necessary, but not lower than 20 per centum of the mortgagor’s income; or (B) the difference between the amount of the monthly payment for principal, interest, and insurance premium chargeable under section 1703 of this title which the manufactured homeowner is obligated to pay under the loan or advance of credit and the monthly payment of principal and interest which the owner would be obligated to pay if the loan or ad- vance of credit were to bear an interest rate determined by the Secretary which shall not be less than 12 per centum per annum. (6) The Secretary may include in the payment to the mortgagee or other lender such amount, in addition to the amount computed under para- graph (4) or (5), as the Secretary deems appro- priate to reimburse the mortgagee or other lend- er for its reasonable and necessary expenses in handling the mortgage, loan, or advance of cred- it. (7) The Secretary shall prescribe such regula- tions as the Secretary deems necessary to as- sure that the sales price of, or other consider- ation paid in connection with, the purchase by a homeowner of the property with respect to which assistance payments are to be made is not greater than the appraised value as determined by the Secretary. (8) Assistance payments pursuant to para- graph (5) shall not be made with respect to more than 20 per centum of the total number of units with respect to which assistance is approved under this subsection. (9) The Secretary may, in addition to mort- gages insured under subsection (i) or (j), insure, upon application by the mortgagee, a mortgage executed by a mortgagor who meets the eligi- bility requirements for assistance payments pre- scribed by the Secretary under paragraph (2). Commitments for the insurance of such mort- gages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. (10) To be eligible for insurance under this sub- section, a mortgage shall— (A) be a first lien on real estate held in fee simple, or on a leasehold under a lease which meets terms and conditions established by the Secretary; (B) have been made to, and be held by, a mortgagee approved by the Secretary as re- sponsible and able to service the mortgage properly; (C) involve a one- to four-family dwelling which has been approved by the Secretary prior to the beginning of construction, or if not so approved, has been completed within one year prior to the filing of the application for insurance and which has never been sold other than to the mortgagor; (D) involve a principal residence the sales price of which does not exceed 82 per centum of the applicable maximum principal obliga- tion of a mortgage which may be insured in the area pursuant to section 1709(b)(2) of this title, determined without regard to the last sentence of such section; Page 662 TITLE 12—BANKS AND BANKING § 1715z (E) have maturity and amortization provi- sions satisfactory to the Secretary; (F) bear interest (exclusive of premium charges for insurance, and service charges if any) at not to exceed the applicable maximum rate for mortgages insured pursuant to section 1709(b) of this title; (G) be executed by a mortgagor who shall have paid in cash or its equivalent, on account of the property, at least an amount equal to 3 per centum of the Secretary’s estimate of the cost of acquisition; and (H) contain such other terms and conditions as the Secretary may prescribe. (11) The Secretary shall, to the extent prac- ticable, insure mortgages under this subsection which are secured by properties which con- tribute to the conservation of land and energy resources. (12) A mortgage to be assisted under this sub- section shall, where the Secretary deems it ap- propriate, provide for graduated payments pur- suant to section 1715z–10 1 of this title. (13) The Secretary shall develop and utilize a system to allocate assistance under this sub- section in a manner which assures a reasonable distribution of such assistance among the var- ious regions of the country and which takes into consideration such factors as population, rel- ative decline in building permits, the need for increased housing production, and other factors he deems appropriate. Assistance provided under this subsection shall not be subject to section 1439 of title 42. (14) Upon the disposition by the homeowner of any property assisted pursuant to this sub- section, or where the homeowner rents the prop- erty (or the owner’s unit in the case of a two- to four-family residence) for a period longer than one year, the Secretary shall provide for the re- capture of an amount equal to the lesser of (A) the amount of assistance actually received under this subsection, other than any amount provided under paragraph (6), or (B) an amount at least equal to 50 per centum of the net appre- ciation of the property, as determined by the Secretary. For the purpose of this paragraph, the term ‘‘net appreciation of the property’’ means any increase in the value of the property over the original purchase price, less the reason- able costs of sale, the reasonable costs of im- provements made to the property, and any in- crease in the mortgage balance as of the time of sale over the original mortgage balance due to the mortgage being insured pursuant to section 1715z–10 1 of this title. In providing for such re- capture, the Secretary shall include incentives for the homeowner to maintain the property in a marketable condition. Notwithstanding any other provision of law, any such assistance shall constitute a debt secured by the property to the extent that the Secretary may provide for such recapture. (15) Procedures shall be adopted by the Sec- retary for recertification of the homeowner’s in- come at intervals of two years (or at shorter in- tervals where the Secretary deems it desirable) for the purpose of adjusting the amount of such assistance payments within the limits of the formula described in paragraph (4) or (5). (r) Refinancing (1) The Secretary is authorized, upon applica- tion of a mortgagee, to insure under this sub- section a mortgage the proceeds of which are used to refinance a mortgage insured under this section. (2) To be eligible for insurance under this sub- section, a mortgage must be executed by a mort- gagor meeting the requirements of paragraph (3) and shall— (A) be a first lien on real estate held in fee simple, or on a leasehold under a lease— (i) for not less than 99 years which is re- newable; or (ii) having a period of not less than 10 years to run beyond the maturity date of the mortgage; (B) have been made to, and held by, a mort- gagee approved by the Secretary; (C) be in an amount not exceeding the out- standing principal balance, including any un- paid interest, due on the mortgage being refi- nanced; (D) have a maturity not exceeding the unex- pired term of the mortgage being refinanced; (E) bear an interest rate not exceeding such percent per annum on the amount of the prin- cipal obligation outstanding at any time as the Secretary finds necessary to meet the mortgage market, taking into consideration the yields on mortgages in the primary and secondary markets; to the extent that the amounts described in paragraphs (4)(A) and (B) are not otherwise paid by the Secretary, the foregoing interest rate may be increased, in the discretion of the Secretary, to compensate the mortgagee for its payment to, or on behalf of, the mortgagor of such amounts; and (F) meet the criteria for refinancing as de- termined by the Secretary. (3) Notwithstanding the provisions of sub- section (h)(2), assistance payments in connec- tion with mortgages insured under paragraph (2) shall be made only with respect to a family who is eligible for, and receiving assistance pay- ments with respect to, the insured mortgage being refinanced. (4) The Secretary is authorized and, to the ex- tent provided in appropriation Acts, may pay to the mortgagor (directly, through the mortgagee, or otherwise)— (A) an amount, as approved by the Sec- retary, as an incentive to the mortgagor to re- finance a mortgage insured under this section; and (B) an amount as approved by the Secretary for costs incurred in connection with the refi- nancing, including but not limited to dis- counts, loan origination fees, and closing costs. (5) Amounts of budget authority required for assistance payments contracts with respect to mortgages insured under this subsection shall be derived from amounts recaptured from assist- ance payments contracts relating to mortgages that are being refinanced. For purposes of sub- section (c)(3)(A), the amount of recaptured budg- et authority that the Secretary commits for as- sistance payments contracts relating to mort- Page 663 TITLE 12—BANKS AND BANKING § 1715z gages insured under this subsection shall not be construed as ‘‘unused’’. (6) The Secretary is authorized to take any ac- tions to identify and communicate with any mortgagor of a mortgage insured under this sec- tion to implement the refinancing of such mort- gages with insurance under this subsection. The Secretary may take such actions directly, or under contract. Notwithstanding the restriction of section 552a(b) of title 5, upon the request of an approved mortgagee, the Secretary may dis- close to such mortgagee the name and address of any mortgagor of a mortgage insured under this section that meets the criteria for refinancing, pursuant to paragraph (2)(F), and the unpaid principal balance and interest rate on such mortgage. (7) The Secretary shall implement the provi- sions of this subsection by a notice published in the Federal Register. (June 27, 1934, ch. 847, title II, § 235, as added Pub. L. 90–448, title I, § 101(a), Aug. 1, 1968, 82 Stat. 477; amended Pub. L. 91–152, title I, §§ 101(d), 106, 107(a), 109, 113(i), title IV, §§ 412(b), 418(a), Dec. 24, 1969, 83 Stat. 379, 381, 385, 398, 402; Pub. L. 91–609, title I, §§ 101(d), 102(a), 105–107, Dec. 31, 1970, 84 Stat. 1770, 1771; Pub. L. 92–503, § 1(d), Oct. 18, 1972, 86 Stat. 906; Pub. L. 93–85, § 1(d), Aug. 10, 1973, 87 Stat. 220; Pub. L. 93–117, § 1(d), Oct. 2, 1973, 87 Stat. 421; Pub. L. 93–383, title II, § 211, Aug. 22, 1974, 88 Stat. 671; Pub. L. 94–375, § 3(a)–(c), (e), (f), Aug. 3, 1976, 90 Stat. 1068, 1069; Pub. L. 95–128, title II, § 205, title III, §§ 301(d), 303(f), Oct. 12, 1977, 91 Stat. 1130, 1131, 1132; Pub. L. 95–406, § 1(d), Sept. 30, 1978, 92 Stat. 879; Pub. L. 95–557, title III, § 301(d), Oct. 31, 1978, 92 Stat. 2096; Pub. L. 96–71, § 1(d), Sept. 28, 1979, 93 Stat. 501; Pub. L. 96–105, § 1(d), Nov. 8, 1979, 93 Stat. 794; Pub. L. 96–153, title II, § 213, title III, § 301(d), Dec. 21, 1979, 93 Stat. 1111; Pub. L. 96–372, § 1(d), Oct. 3, 1980, 94 Stat. 1363; Pub. L. 96–399, title II, §§ 206(a), (b)(1), 207, title III, §§ 301(d), 308(c)(1), (2), Oct. 8, 1980, 94 Stat. 1630, 1631, 1638, 1640; Pub. L. 97–35, title III, §§ 328, 331(d), Aug. 13, 1981, 95 Stat. 407, 412; Pub. L. 97–110, title III, § 304, Dec. 26, 1981, 95 Stat. 1515; Pub. L. 97–185, May 24, 1982, 96 Stat. 100; Pub. L. 97–253, title II, § 201(f), Sept. 8, 1982, 96 Stat. 790; Pub. L. 97–289, § 1(d), Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35, § 1(d), May 26, 1983, 97 Stat. 197; Pub. L. 98–109, § 1(d), Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181, title I [title II, § 226, title IV, §§ 401(d), 404(b)(12), 423(b)(5)], Nov. 30, 1983, 97 Stat. 1194, 1207, 1209, 1217; Pub. L. 98–479, title I, §§ 102(a)(1), 104(a)(3), title II, § 204(a)(8), Oct. 17, 1984, 98 Stat. 2221, 2224, 2232; Pub. L. 99–120, § 1(d), Oct. 8, 1985, 99 Stat. 502; Pub. L. 99–156, § 1(d), Nov. 15, 1985, 99 Stat. 815; Pub. L. 99–219, § 1(d), Dec. 26, 1985, 99 Stat. 1730; Pub. L. 99–267, § 1(d), Mar. 27, 1986, 100 Stat. 73; Pub. L. 99–272, title III, § 3007(d), Apr. 7, 1986, 100 Stat. 104; Pub. L. 99–289, § 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345, § 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30, 1987, 101 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; Pub. L. 100–242, §§ 170(a), 401(c), 406(b)(18), (19), Feb. 5, 1988, 101 Stat. 1867, 1898, 1901; Pub. L. 101–144, title II, Nov. 9, 1989, 103 Stat. 852; Pub. L. 101–235, title I, § 125(a)–(c), Dec. 15, 1989, 103 Stat. 2022–2024.) Editorial Notes REFERENCES IN TEXT Section 1715z–2 of this title, referred to in subsec. (b)(1), was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(6), July 30, 2008, 122 Stat. 2835. Section 1715z–10 of this title, referred to in subsecs. (c)(2)(A) and (q)(12), (14), was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(7), July 30, 2008, 122 Stat. 2835. The Housing and Community Development Act of 1974, referred to in subsec. (h)(1), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. Title I of the Housing and Commu- nity Development Act of 1974 is classified principally to chapter 69 (§ 5301 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of Title 42 and Tables. Section 101 of the Housing and Urban Development Act of 1965, referred to in subsec. (i)(3)(A), is section 101 of Pub. L. 89–117, title I, Aug. 10, 1965, 79 Stat. 451, which enacted section 1701s of this title and amended sections 1451 and 1465 of Title 42. Section 1709–1 of this title, referred to in subsec. (q)(4)(B), was repealed by Pub. L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat. 1208. AMENDMENTS 1989—Subsec. (c)(1). Pub. L. 101–235, § 125(c)(1), in- serted ‘‘, other than a contract in connection with a re- financing under subsection (r),’’ after ‘‘any new con- tract’’ in second sentence. Subsec. (c)(3)(A). Pub. L. 101–235, § 125(c)(2), which di- rected the insertion of ‘‘(except to the extent provided in subsection (r) for mortgages insured under such sub- section)’’ after ‘‘refinanced,’’ in second sentence, was executed by making the insertion after ‘‘refinanced’’ as the probable intent of Congress. Subsec. (c)(3)(C). Pub. L. 101–235, § 125(b), inserted at end ‘‘Notwithstanding the preceding sentence, any amounts of budget authority or contract authority re- captured from assistance payments contracts relating to mortgages that are being refinanced that are not re- quired for assistance payments contracts relating to mortgages insured under this subsection, shall be re- scinded.’’ Subsec. (e). Pub. L. 101–235, § 125(c)(3), inserted ref- erence to subsec. (r). Subsec. (h)(1). Pub. L. 101–235, § 125(c)(4), inserted ‘‘(other than obligations in connection with mortgages insured under subsection (r))’’ in third sentence, ‘‘(ex- cept under subsection (r))’’ in sixth sentence, and ‘‘(other than a contract in connection with a mortgage insured under subsection (r))’’ in seventh sentence. Subsec. (h)(3). Pub. L. 101–235, § 125(c)(5), inserted sen- tence at end providing that the preceding sentence shall not apply to contracts in connection with mort- gages insured under subsec. (r). Subsec. (m). Pub. L. 101–235, § 125(c)(6), inserted ‘‘(ex- cept a mortgage insured under subsection (r))’’ after ‘‘No mortgage’’. Subsec. (n). Pub. L. 101–235, § 125(c)(7), inserted ‘‘or to a mortgage insured under subsection (r)’’ before period at end. Subsec. (r). Pub. L. 101–235, § 125(a), amended subsec. (r) generally. Prior to amendment, subsec. (r) read as follows: ‘‘(1) REVIEW OF ASSISTANCE PAYMENTS CONTRACTS.— ‘‘(A) The Secretary shall periodically review each contract under which the Secretary is making assist- ance payments under this section to determine if a refinancing of the mortgage, loan, or advance of cred- it involved will result in a sufficient reduction in as- sistance payments to warrant such refinancing. ‘‘(B) In the case of assistance payments contracts in effect on November 9, 1989, the Secretary shall Page 664 TITLE 12—BANKS AND BANKING § 1715z complete such review within 60 days in order to per- mit the refinancing to be completed during fiscal year 1990. ‘‘(2) REFINANCING ASSISTANCE.—In any case in which the Secretary determines that refinancing is war- ranted, the Secretary shall offer financial assistance appropriate to encourage the refinancing. The assist- ance may include the following: ‘‘(A) For lenders and mortgagees providing refi- nancing, the payment of reasonable mortgage or loan origination fees, discount points, and other expenses required to refinance; and ‘‘(B) For the homeowner or cooperative member in- volved, the payment of an amount that does not ex- ceed 1 percent of the principal amount refinanced. ‘‘(3) METHOD OF PAYMENT OF REFINANCING ASSIST- ANCE.—In any case in which the Secretary determines that refinancing is warranted, the Secretary shall pro- vide incentives in a manner that does not increase total expenditures in fiscal year 1990. The Secretary shall structure refinancings as follows: ‘‘(A) Lenders and mortgagees providing refinancings under this subsection may charge an in- terest rate for refinancing that is not greater than 0.5 percent higher than the prevailing market rate for refinancing. ‘‘(B) Payments to the homeowner or cooperative member to encourage refinancing shall be paid through a reduction in the monthly payment of the homeowner or cooperative member under the mort- gage, loan, or advance of credit. ‘‘(4) REVISION OF CONTRACTS AND RESCISSION OF EXCESS AMOUNTS.— ‘‘(A) The Secretary shall make such revisions in any assistance payments contract (including the amount of assistance payments made under the con- tract) as are necessary to reflect a refinancing ob- tained pursuant to this subsection. A revised assist- ance payments contract under this paragraph shall not be considered to be a new contract under this sec- tion. ‘‘(B) Any contract authority that becomes available as a result of the revision of an assistance payments contract under this paragraph shall be rescinded.’’ Pub. L. 101–144 added subsec. (r). 1988—Subsec. (h)(1). Pub. L. 100–242, § 401(c), sub- stituted ‘‘September 30, 1989’’ for ‘‘March 15, 1988’’. Subsec. (i)(3)(A). Pub. L. 100–242, § 406(b)(18), struck out ‘‘one of the units of which is to be occupied by the owner and’’ after ‘‘three-family dwelling’’. Subsec. (i)(3)(C). Pub. L. 100–242, § 170(a), substituted ‘‘(including’’ for ‘‘including’’. Subsec. (j)(6). Pub. L. 100–242, § 406(b)(19), struck out ‘‘if one of the units is to be occupied by the owner’’ after ‘‘Secretary’’. Subsecs. (m), (q)(1). Pub. L. 100–242, § 401(c), sub- stituted ‘‘September 30, 1989’’ for ‘‘March 15, 1988’’. 1987—Subsecs. (h)(1), (m), (q)(1). Pub. L. 100–200 sub- stituted ‘‘March 15, 1988’’ for ‘‘December 16, 1987’’. Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for ‘‘December 2, 1987’’. Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for ‘‘November 15, 1987’’. Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for ‘‘October 31, 1987’’. Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for ‘‘September 30, 1987’’. 1986—Subsecs. (h)(1), (m), (q)(1). Pub. L. 99–430 sub- stituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’. Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for ‘‘June 6, 1986’’. Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30, 1986’’. Pub. L. 99–272 made amendment identical to Pub. L. 99–219. See 1985 Amendment note below. Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March 17, 1986’’. 1985—Subsecs. (h)(1), (m), (q)(1). Pub. L. 99–219 sub- stituted ‘‘March 17, 1986’’ for ‘‘December 15, 1985’’. Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for ‘‘November 14, 1985’’. Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for ‘‘September 30, 1985’’. 1984—Subsec. (h)(1). Pub. L. 98–479, § 102(a)(1), inserted ‘‘utilizing amounts approved in appropriation Acts be- fore November 30, 1983,’’ before ‘‘except (i)’’ and sub- stituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’ in last sentence. Subsec. (i)(3)(C). Pub. L. 98–479, § 204(a)(8), substituted ‘‘Secretary’’ for ‘‘Seretary’’ before ‘‘authorizes an in- crease’’. Subsec. (j)(2)(C). Pub. L. 98–479, § 104(a)(3), substituted ‘‘bear interest at a rate not to exceed such percent per annum on the amount of the principal obligation out- standing at any time as the Secretary determines is necessary to meet the mortgage market, taking into consideration the yields on mortgages in the primary and secondary markets’’ for ‘‘bear interest (exclusive of premium charges for insurance and service charge, if any) at not to exceed such per centum per annum (not in excess of 6 per centum), on the amount of the prin- cipal obligation outstanding at any time, as the Sec- retary finds necessary to meet the mortgage market’’. 1983—Subsec. (c)(1). Pub. L. 98–181, § 226(a), sub- stituted ‘‘Subject to the second sentence of this para- graph, the’’ for ‘‘The’’, and inserted provision limiting to a 10-year period assistance payments pursuant to any new contract entered into after Sept. 30, 1983, uti- lizing authority approved in appropriation Acts for any fiscal year beginning after such date. Subsec. (c)(3). Pub. L. 98–181, § 226(b), added par. (3). Subsec. (h)(1). Pub. L. 98–181, § 226(c), struck out ‘‘and’’ after ‘‘on July 1, 1971’’, and inserted ‘‘, and by such sums as may be approved in an appropriation Act on or after October 1, 1983 (from the additional author- ity to enter into contracts made available on such date under the first sentence of section 1437c(c)(1) of title 42). The aggregate amount that may be obligated over the duration of the contracts entered into with the au- thority provided on or after October 1, 1983, may not ex- ceed such sums of new budget authority as may be ap- propriated after November 30, 1983. The Secretary shall begin issuing new commitments and reservations to provide mortgage insurance and assistance payments under this section before the expiration of the 30-day period following the approval in any appropriation Act of budget authority for this section after November 30, 1983.’’ Pub. L. 98–109, § 1(d)(1), substituted ‘‘November 30, 1983’’ for ‘‘September 30, 1983’’. Subsec. (i)(3)(A). Pub. L. 98–181, § 226(d)(1), substituted ‘‘three-family’’ for ‘‘two-family’’, and ‘‘involve a single- family or a two-family’’ for ‘‘involve a single-family’’. Subsec. (i)(3)(B), (C). Pub. L. 98–181, § 423(b)(5)(A), (B), struck out ‘‘: Provided, That the foregoing maximum mortgage amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage is insured’’ after ‘‘$55,000, respectively’’. Subsec. (i)(3)(D). Pub. L. 98–181, § 423(b)(5)(C), struck out ‘‘: Provided, That the foregoing maximum mort- gage amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage is insured’’ after ‘‘cost levels so require)’’. Pub. L. 98–181, § 226(d)(2), inserted ‘‘or three-family’’ and substituted ‘‘$60,000’’ for ‘‘$55,000’’ and ‘‘$66,250’’ for ‘‘$61,250’’. Subsec. (i)(3)(F). Pub. L. 98–181, § 404(b)(12), added sub- par. (F). Subsec. (i)(4), (5). Pub. L. 98–181, § 226(d)(3), added pars. (4) and (5). Subsec. (j)(6). Pub. L. 98–181, § 226(e)(1), substituted ‘‘two- to three-family’’ for ‘‘two-family’’. Subsec. (j)(9). Pub. L. 98–181, § 226(e)(2), added par. (9). Subsec. (m). Pub. L. 98–181, § 401(d)(1), substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’. Pub. L. 98–109, § 1(d)(2), substituted ‘‘November 30, 1983’’ for ‘‘September 30, 1983’’. Pub. L. 98–35, § 1(d)(1), substituted ‘‘September 30, 1983’’ for ‘‘May 20, 1983’’. Subsec. (q)(1). Pub. L. 98–181, § 401(d)(2), substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’. Page 665 TITLE 12—BANKS AND BANKING § 1715z Pub. L. 98–109, § 1(d)(3), substituted ‘‘November 30, 1983’’ for ‘‘September 30, 1983’’. Pub. L. 98–35, § 1(d)(2), substituted ‘‘September 30, 1983’’ for ‘‘May 20, 1983’’. 1982—Subsec. (h)(1). Pub. L. 97–289, § 1(d)(1), sub- stituted ‘‘May 20, 1983’’ for ‘‘September 30, 1982’’ in two places. Subsec. (i)(3)(B). Pub. L. 97–253, § 201(f)(1), inserted provision that the foregoing maximum mortgage amounts may be increased by the amount of the mort- gage insurance premium paid at the time the mortgage is insured. Subsec. (i)(3)(C). Pub. L. 97–253, § 201(f)(2), inserted provision that the foregoing maximum mortgage amounts may be increased by the amount of the mort- gage insurance premium paid at the time the mortgage is insured. Subsec. (i)(3)(D). Pub. L. 97–253, § 201(f)(3), inserted provision that the foregoing maximum mortgage amounts may be increased by the amount of the mort- gage insurance premium paid at the time the mortgage is insured. Subsec. (i)(3)(E). Pub. L. 97–253, § 201(f)(4), inserted ‘‘(excluding the mortgage insurance premium paid at the time the mortgage is insured)’’ after ‘‘cost of acqui- sition’’. Subsec. (m). Pub. L. 97–289, § 1(d)(2), substituted ‘‘May 20, 1983’’ for ‘‘September 30, 1982’’. Subsec. (q)(1). Pub. L. 97–289, § 1(d)(3), substituted ‘‘May 20, 1983’’ for ‘‘September 30, 1982’’. 1981—Subsec. (c)(2)(A). Pub. L. 97–35, § 328(a), struck out provisions relating to homeowner ceasing to make payments for a period of 90 continuous days or more under the mortgage, etc. Subsec. (h)(1). Pub. L. 97–110 expanded enumeration of exceptions to provision that the Secretary not enter into new contracts for assistance payments under this section after March 31, 1982, by designating the two ex- isting exceptions as cls. (i) and (ii) and by adding cl. (iii). Pub. L. 97–35, § 328(b), inserted provisions prohibiting new contracts for assistance under this section after Mar. 1, 1982, except pursuant to specified exceptions. Subsec. (m). Pub. L. 97–35, § 331(d)(1), substituted ‘‘1982’’ for ‘‘1981’’. Subsec. (q)(1). Pub. L. 97–35, § 331(d)(2), substituted ‘‘September 30, 1982’’ for ‘‘June 1, 1981’’. Subsec. (q)(14). Pub. L. 97–35, § 328(c), struck out pro- visions relating to homeowner ceasing to make pay- ments for a period of 90 continuous days or more under the mortgage, etc. 1980—Subsec. (a)(2)(A). Pub. L. 96–399, § 308(c)(1), sub- stituted ‘‘manufactured home’’ for ‘‘mobile home’’ wherever appearing. Subsec. (a)(2)(B). Pub. L. 96–399, § 308(c)(2), substituted ‘‘manufactured homeowner’’ and ‘‘manufactured home- owner’s’’ for ‘‘mobile homeowner’’ and ‘‘mobile home- owner’s’’, respectively. Subsec. (b)(2). Pub. L. 96–399, § 206(a)(1), substituted in last proviso ‘‘$40,000’’ for ‘‘$32,000’’, ‘‘$47,500’’ for ‘‘$38,000’’ in two places, and ‘‘$55,000’’ for ‘‘$44,000’’. Subsec. (c). Pub. L. 96–399, § 206(b)(1), designated exist- ing provisions as par. (1), redesignated existing pars. (1) and (2) as subpars. (A) and (B), respectively, and added par. (2). Subsec. (i)(3)(B) to (D). Pub. L. 96–399, § 206(a)(2), (3), substituted ‘‘$40,000’’ for ‘‘$32,000’’, ‘‘$47,500’’ for ‘‘$38,000’’, ‘‘$55,000’’ for ‘‘$44,000’’, and ‘‘$61,250’’ for ‘‘$49,000’’. Subsec. (m). Pub. L. 96–399, § 301(d), substituted ‘‘Sep- tember 30, 1981’’ for ‘‘October 15, 1980’’. Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘Sep- tember 30, 1980’’. Subsec. (p). Pub. L. 96–399, § 206(a)(4), added subsec. (p). Subsec. (q). Pub. L. 96–399, § 207, added subsec. (q). 1979—Subsec. (a)(1). Pub. L. 96–153, § 213(a), inserted provision that the Secretary give preference to low-in- come families who are likely to be displaced without assistance and that the assistance may include the ac- quisition of a condominium or membership in a cooper- ative association. Subsec. (c)(2). Pub. L. 96–153, § 213(c)(2), inserted par- enthetical reference to 4 per centum per annum rate in the case of a mortgage described in subsec. (o) of this section. Subsec. (i)(3)(A). Pub. L. 96–153, § 213(b), substituted ‘‘standards as the Secretary may prescribe:’’ for ‘‘standards as the Secretary may prescribe, if the mort- gagor qualifies as a displaced family as defined in sec- tion 1715l(f) of this title, or a family which includes five or more minor persons, or a family occupying low-rent public housing:’’. Subsec. (m). Pub. L. 96–153, § 301(d), substituted ‘‘Sep- tember 30, 1980’’ for ‘‘November 30, 1979’’. Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for ‘‘October 31, 1979’’. Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘Sep- tember 30, 1979’’. Subsec. (o). Pub. L. 96–153, § 213(c)(1), added subsec. (o). 1978—Subsec. (m). Pub. L. 95–557 substituted ‘‘Sep- tember 30, 1979’’ for ‘‘October 31, 1978’’. Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘Sep- tember 30, 1978’’. 1977—Subsec. (b)(2). Pub. L. 95–128, §§ 205, 303(f)(1), in- serted reference to section 1715l(d)(3) of this title and substituted in last proviso ‘‘$32,000’’ for ‘‘$25,000’’, ‘‘$38,000’’ for ‘‘$29,000’’ in two places, and ‘‘$44,000’’ for ‘‘$33,000’’. Subsec. (i)(3)(B) to (E). Pub. L. 95–128, § 303(f)(2)–(4), substituted in subpar. (B) ‘‘$32,000’’ for ‘‘$25,000’’, ‘‘$38,000’’ for ‘‘$29,000’’ in two places, and ‘‘$44,000’’ for ‘‘$33,000’’, added subpars. (C) and (D), and redesignated former subpar. (C) as (E). Subsec. (m). Pub. L. 95–128, § 301(d), substituted ‘‘Sep- tember 30, 1978’’ for ‘‘September 30, 1977’’. Subsec. (n). Pub. L. 95–128, § 303(f)(5), added subsec. (n). 1976—Subsec. (a). Pub. L. 94–375, § 3(f)(1), designated existing provisions as par. (1) and added par. (2). Subsec. (b)(2). Pub. L. 94–375, § 3(b), substituted ‘‘$25,000’’ for ‘‘$21,600’’, ‘‘$29,000’’ for ‘‘$25,200’’ in two places, and ‘‘$33,000’’ for ‘‘$28,800’’. Subsec. (e). Pub. L. 94–375, § 3(f)(2), inserted ‘‘(a)(2)(B),’’ after ‘‘computed under subsection’’. Subsec. (h)(2). Pub. L. 94–375, § 3(e), substituted ‘‘95 per centum’’ for ‘‘80 per centum’’ wherever appearing. Subsec. (i)(3)(B). Pub. L. 94–375, § 3(c), substituted ‘‘$25,000’’ for ‘‘$21,600’’, ‘‘$29,000’’ for ‘‘$25,200’’ in two places, and ‘‘$33,000’’ for ‘‘$28,800’’. Subsec. (m). Pub. L. 94–375 § 3(a), substituted ‘‘Sep- tember 30, 1977’’ for ‘‘June 30, 1976’’. 1974—Subsec. (a). Pub. L. 93–383, § 211(b), inserted pro- visions relating to mortgages assisted under a State or local program providing assistance through loans, etc. Subsec. (b)(2). Pub. L. 93–383, § 211(c)(1), substituted ‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,200’’ for ‘‘$21,000’’ in two places, and ‘‘$28,800’’ for ‘‘$24,000’’. Subsec. (h)(1). Pub. L. 93–383, § 211(a)(1), (2), inserted provisions relating to increases by such sums as may be approved in appropriations Acts after June 30, 1974, and prior to July 1, 1976, and provisions prohibiting new contracts for assistance payments upon the expiration of one year following Aug. 22, 1974. Subsec. (h)(2). Pub. L. 93–383, § 211(a)(3), substituted provisions setting forth requirements for assistance payments for families for provisions setting forth max- imum income limits of families receiving assistance payments under contracts and provisions relating to annual report to Congressional Committees with re- spect to income levels of families. Subsec. (h)(3)(B). Pub. L. 93–383, § 211(a)(4), sub- stituted ‘‘on or after July 1, 1969’’ for ‘‘prior to July 1, 1972’’. Subsec. (i)(1). Pub. L. 93–383, § 211(a)(5), inserted provi- sions authorizing insurance of advances for property construction or rehabilitation pursuant to self-help programs. Subsec. (i)(3)(B). Pub. L. 93–383, § 211(c)(2), substituted ‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,200’’ for ‘‘$21,000’’ in two places, and ‘‘$28,800’’ for ‘‘$24,000’’. Page 666 TITLE 12—BANKS AND BANKING § 1715z Subsec. (i)(3)(C). Pub. L. 93–383, § 211(a)(6), struck out provisions relating to execution by a mortgagor in the case of a family whose income is not in excess of 135 per centum of the maximum income limits established in the area pursuant to specified limitations or any other family. Subsec. (m). Pub. L. 93–383, § 211(a)(7), substituted ‘‘June 30, 1976’’ for ‘‘October 1, 1974’’. 1973—Subsec. (m). Pub. L. 93–117 substituted ‘‘October 1, 1974’’ for ‘‘October 1, 1973’’. Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June 30, 1973’’. 1972—Subsec. (m). Pub. L. 92–503 substituted ‘‘June 30, 1973’’ for ‘‘October 1, 1972’’. 1970—Subsec. (b)(2). Pub. L. 91–609, § 107, designated existing provisions as cl. (A) and added cl. (B). Subsec. (h)(1). Pub. L. 91–609, § 102(a), in second sen- tence, inserted ‘‘outstanding’’ before ‘‘contracts’’ where first appearing and substituted ‘‘$150,000,000 on July 1, 1970’’ and ‘‘$200,000,000 on July 1, 1971’’ for ‘‘$125,000,000 on July 1, 1970’’ and ‘‘$170,000,000 on July 1, 1971’’. Subsec. (h)(3)(B). Pub. L. 91–609, § 105(1), substituted ‘‘July 1, 1972’’ for ‘‘July 1, 1971’’. Subsec. (h)(4). Pub. L. 91–609, § 105(2), added par. (4). Subsec. (i)(3)(A). Pub. L. 91–609, § 106, substituted ‘‘and which is approved by the Secretary’’ for ‘‘if the dwell- ing is purchased with the assistance of a nonprofit or- ganization and is approved by the Secretary’’. Subsec. (m). Pub. L. 91–609, § 101(d), substituted ‘‘Oc- tober 1, 1972’’ for ‘‘October 1, 1971’’. 1969—Subsec. (b)(2). Pub. L. 91–152, §§ 106(b), 113(i), substituted provisions qualifying for assistance pay- ments the transferee of any cooperative member who has received assistance payments, provided that such transferee undertakes the obligation to pay occupancy charges, for provisions qualifying for assistance pay- ments the transferee of the initial cooperative member receiving assistance payments, and substituted ‘‘$18,000’’ for ‘‘$15,000’’, ‘‘$21,000’’ for ‘‘$17,500’’ wherever appearing, and ‘‘$24,000’’ for ‘‘$20,000’’. Subsec. (c). Pub. L. 91–152, §§ 106(a), 418(a), inserted reference to subsection (i) of this section, and inserted the further proviso authorizing the Secretary to con- tinue making assistance payments. Subsec. (h)(1). Pub. L. 91–152, § 107(a), substituted ‘‘$125,000,000 on July 1, 1969, by ‘‘$125,000,000 on July 1, 1970, and by $170,000,000 on July 1, 1971’’ for ‘‘$100,000,000 on July 1, 1969, and by $125,000,000 on July 1, 1970’’. Subsec. (h)(2). Pub. L. 91–152, § 412(b), required the Secretary to report semiannually instead of annually to the respective Committees on Banking and Currency of the Senate and House of Representatives. Subsec. (h)(3)(A). Pub. L. 91–152, § 109(1), inserted ‘‘and’’ after ‘‘July 1, 1969’’. Subsec. (h)(3)(B). Pub. L. 91–152, § 109(2), substituted ‘‘30 per centum’’ for ‘‘15 per centum’’ and ‘‘July 1, 1971,’’ for ‘‘July 1, 1970, and’’. Subsec. (h)(3)(C). Pub. L. 91–152, § 109(2), struck out subsec. (h)(3)(C) which limited the amount available for home-ownership assistance payments to 10 per centum of the total additional amount of contracts for assist- ance payments authorized by appropriation Acts made prior to July 1, 1971. Subsec. (i)(3)(B). Pub. L. 91–152, § 113(i), substituted ‘‘$18,000’’ for ‘‘$15,000’’, ‘‘$21,000’’ for ‘‘$17,500’’ wherever appearing, and ‘‘$24,000’’ for ‘‘$20,000’’. Subsec. (m). Pub. L. 91–152, § 101(d), added subsec. (m). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 406(b)(18), (19) of Pub. L. 100–242 applicable only with respect to mortgages in- sured pursuant to conditional commitment issued on or after Feb. 5, 1988, or in accordance with direct endorse- ment program (24 CFR 200.163), if approved underwriter of mortgagee signs appraisal report for property on or after Feb. 5, 1988, see section 406(d) of Pub. L. 100–242, set out as a note under section 1709 of this title. EFFECTIVE DATE OF 1983 AMENDMENT For effective date of amendment by section 423(b)(5) of Pub. L. 98–181, see section 423(c) of Pub. L. 98–181, set out as a note under section 1709 of this title. EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see section 371 of Pub. L. 97–35, set out as an Effective Date note under section 3701 of this title. EFFECTIVE DATE OF 1980 AMENDMENT Pub. L. 96–399, title II, § 206(b)(2), Oct. 8, 1980, 94 Stat. 1631, provided: ‘‘The amendment made by paragraph (1) [amending this section] does not apply to any assist- ance contract under section 235 of the National Housing Act [this section] entered into pursuant to a commit- ment issued within 6 months following the date of en- actment of this Act [Oct. 8, 1980].’’ TERMINATION OF PROGRAM; SAVINGS PROVISION Pub. L. 101–235, title I, § 125(d), Dec. 15, 1989, 103 Stat. 2024, provided that: ‘‘Notwithstanding the termination of the program under section 235 [this section] pursuant to section 401(d) of the Housing and Community Devel- opment Act of 1987 [Pub. L. 100–242, set out below], the Secretary of Housing and Urban Development shall have authority to insure mortgages under section 235(r), to make assistance payments with respect to such insured mortgages, and to make any other pay- ment or take any other action related to the refi- nancing of mortgages insured under section 235.’’ Pub. L. 100–242, title IV, § 401(d), Feb. 5, 1988, 101 Stat. 1899, provided that: ‘‘(1) IN GENERAL.—Effective on October 1, 1989, the program under section 235 of the National Housing Act [this section] shall terminate. ‘‘(2) SAVINGS PROVISION.—The provisions of paragraph (1) shall not affect— ‘‘(A) any mortgage insurance commitment issued; or ‘‘(B) any assistance pursuant to a reservation of funds made; under section 235 of the National Housing Act prior to October 1, 1989.’’ IMPLEMENTATION OF 1982 AMENDMENT Amendment by Pub. L. 97–253 to be implemented only if the Secretary determines that the program of ad- vance payment of insurance premiums, considering the effect of said amendment, is actuarially sound, see sec- tion 201(g) of Pub. L. 97–253, set out as a note under sec- tion 1709 of this title. STUDY AND REPORT RESPECTING APPLICATION OF SUBSECTION (n) TO SUBSECTIONS (a) AND (q) PROGRAMS Pub. L. 96–399, title II, § 206(c), Oct. 8, 1980, 94 Stat. 1631, directed Secretary of Housing and Urban Develop- ment to conduct a study of effects which application of subsec. (n) of this section has had or is likely to have on program established by subsec. (a). If program estab- lished by subsec. (q) was implemented, Secretary was to include in study an analysis of effects on subsec. (q) program of application of subsec. (n) to such program. Secretary to transmit to Congress, not later than Jan. 1, 1982, a report containing findings and conclusions of study. FINANCING PURCHASE OF DWELLING FROM NONPROFIT ORGANIZATION AFTER AUGUST 1, 1968 Pub. L. 90–448, title I, § 101(c)(4), Aug. 1, 1968, 82 Stat. 484, provided that: ‘‘The purchase of any individual dwelling, sold by a nonprofit organization pursuant to the provisions of section 221(h)(5) of the National Hous- ing Act [12 U.S.C. 1715l(h)(5)] after the date of enact- ment of this section [Aug. 1, 1968], may be financed with a mortgage insured under the provisions of section 235(j)(4) of such Act [12 U.S.C. 1715z(j)(4)], but such mortgage shall bear interest at the rate provided in section 235(j)(2)(C) of such Act.’’ Page 667 TITLE 12—BANKS AND BANKING § 1715z–1 1 So in original. Probably should be ‘‘mortgagees’’. 2 So in original. Probably should be preceded by ‘‘a’’. CEILING ON TOTAL HOMEOWNERSHIP ASSISTANCE PAYMENTS IN ANY FISCAL YEAR Pub. L. 90–608, ch. IV, § 401, Oct. 21, 1968, 82 Stat. 1193, provided in part that the total payments that may be required in any fiscal year by all contracts entered into under section 235 of the National Housing Act [this sec- tion] shall not exceed $25,000,000. Pub. L. 91–47, title II, § 201, July 22, 1969, 83 Stat. 53, increased by $45,000,000 the limitation on total pay- ments that may be required in any fiscal year by all contracts entered into under section 235 of the National Housing Act, as amended (82 Stat. 477) [this section]. § 1715z–1. Rental and cooperative housing for lower income families (a) Authorization for periodic interest reduction payments on behalf of owner of rental hous- ing project For the purpose of reducing rentals for lower income families, the Secretary is authorized to make, and to contract to make, periodic inter- est reduction payments on behalf of the owner of a rental housing project designed for occu- pancy by lower income families, which shall be accomplished through payments to morgagees 1 holding mortgages meeting the special require- ments specified in this section. (b) Restrictions on payments; payments with re- spect to projects financed under State or local programs; mortgage insurance pre- mium Interest reduction payments with respect to a project shall only be made during such time as the project is operated as a rental housing proj- ect and is subject to a mortgage which meets the requirements of, and is insured under, sub- section (j) of this section: Provided, That the Secretary is authorized to continue making such interest reduction payments where the mortgage has been assigned to the Secretary: Provided further, That interest reduction pay- ments may be made with respect to a mortgage or part thereof on a rental or cooperative hous- ing project owned by a private nonprofit cor- poration or other private nonprofit entity, a limited dividend corporation or other limited dividend entity, public 2 entity, or a cooperative housing corporation, which is financed under a State or local program providing assistance through loans, loan insurance, or tax abate- ments, and which may involve either new or ex- isting construction and which is approved for re- ceiving the benefits of this section. The term ‘‘mortgage insurance premium’’, when used in this section in relation to a project financed by a loan under a State or local program, means such fees and charges, approved by the Sec- retary, as are payable by the mortgagor to the State or local agency mortgagee to meet reserve requirements and administrative expenses of such agency. (c) Amount of payments The interest reduction payments to a mort- gagee by the Secretary on behalf of a project owner shall be in an amount not exceeding the difference between the monthly payment for principal, interest, and mortgage insurance pre- mium which the project owner as a mortgagor is obligated to pay under the mortgage and the monthly payment for principal and interest such project owner would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum. (d) Mortgage handling expenses The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (c), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage. (e) Operation of project in accordance with re- quirements respecting tenant eligibility and rents prescribed by Secretary (1) As a condition for receiving the benefits of interest reduction payments, the project owner shall operate the project in accordance with such requirements with respect to tenant eligi- bility and rents as the Secretary may prescribe. Procedures shall be adopted by the Secretary for review of tenant incomes at intervals of one year (or at shorter intervals where the Sec- retary deems it desirable). (2) A project for which interest reduction pay- ments are made under this section and for which the mortgage on the project has been refinanced shall continue to receive the interest reduction payments under this section under the terms of the contract for such payments, but only if the project owner enters into such binding commit- ments as the Secretary may require (which shall be applicable to any subsequent owner) to en- sure that the owner will continue to operate the project in accordance with all low-income af- fordability restrictions for the project in con- nection with the Federal assistance for the project for a period having a duration that is not less than the term for which such interest reduc- tion payments are made plus an additional 5 years. (f) Establishment of basic and fair market rental charges; rental for dwelling units; separate utility metering; additional assistance pay- ments for low-income tenants; limitations; amounts; approval of payments (1)(A)(i) For each dwelling unit there shall be established, with the approval of the Secretary, a basic rental charge and fair market rental charge. (ii) The basic rental charge shall be— (I) the amount needed to operate the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 percent per annum; or (II) an amount greater than that determined under clause (ii)(I), but not greater than the market rent for a comparable unassisted unit, reduced by the value of the interest reduction payments subsidy. (iii) The fair market rental charge shall be— (I) the amount needed to operate the project with payments of principal, interest, and mortgage insurance premium which the mort- gagor is obligated to pay under the mortgage covering the project; or (II) an amount greater than that determined under clause (iii)(I), but not greater than the market rent for a comparable unassisted unit.