§ 1711. — General Surplus and Participating Reserve Accounts.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1711]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1711. General Surplus and Participating Reserve Accounts
(a) Establishment; abolishment of General Reinsurance Account
The Secretary shall establish as of July 1, 1954, in the Mutual
Mortgage Insurance Fund a General Surplus Account and a Participating
Reserve Account. All of the assets of the General Reinsurance Account
shall be transferred to the General Surplus Account whereupon the
General Reinsurance Account shall be abolished. There shall be
transferred from the various group accounts to the Participating Reserve
Account as of July 1, 1954, an amount equal to the aggregate amount
which would have been distributed under the provisions of this section
in effect on June 30, 1954, if all outstanding mortgages in such group
accounts had been paid in full on said date. All of the remaining
balances of said group accounts shall as of said date be transferred to
the General Surplus Account whereupon all of said group accounts shall
be abolished.
(b) Credits and charges
The aggregate net income thereafter received or any net loss
thereafter sustained by the Mutual Mortgage Insurance Fund in any
semiannual period shall be credited or charged to the General Surplus
Account and/or the Participating Reserve Account in such manner and
amounts as the Secretary may determine to be in accord with sound
actuarial and accounting practice.
(c) Distribution of funds to terminating mortgagors
Upon termination of the insurance obligation of the Mutual Mortgage
Insurance Fund by payment of any mortgage insured thereunder, the
Secretary is authorized to distribute to the mortgagor a share of the
Participating Reserve Account in such manner and amount as the Secretary
shall determine to be equitable and in accordance with sound actuarial
and accounting practice: Provided, That, in no event, shall any such
distributable share exceed the aggregate scheduled annual premiums of
the mortgagor to the year of termination of the insurance. The Secretary
shall not distribute any share to an eligible mortgagor under this
subsection beginning on the date which is 6 years after the date the
Secretary first transmitted written notification of eligibility to the
last known address of the mortgagor, unless the mortgagor has applied in
accordance with procedures prescribed by the Secretary for payment of
the share within the 6-year period. The Secretary shall transfer any
amounts no longer eligible for distribution under the previous sentence
from the Participating Reserve Account to the General Surplus Account.
(d) Rights and liabilities
No mortgagor or mortgagee of any mortgage insured under section 1709
of this title shall have any vested right in a credit balance in any
such account or be subject to any liability arising out of the mutuality
of the Fund and the determination of the Secretary as to the amount to
be paid by him to any mortgagor shall be final and conclusive.
(e) Actuarial status of entire Fund
In determining whether there is a surplus for distribution to
mortgagors under this section, the Secretary shall take into account the
actuarial status of the entire Fund.
(f) Capital ratio for Mutual Mortgage Insurance Fund
(1) The Secretary shall ensure that the Mutual Mortgage Insurance
Fund attains a capital ratio of not less than 1.25 percent within 24
months after November 5, 1990, and maintains such ratio thereafter,
subject to paragraph (2).
(2) The Secretary shall endeavor to ensure that the Mutual Mortgage
Insurance Fund attains a capital ratio of not less than 2.0 percent
within 10 years after November 5, 1990, and shall ensure that the Fund
maintains at least such capital ratio at all times thereafter.
(3) Upon the expiration of the 24-month period beginning on November
5, 1990, the Secretary shall submit to the Congress a report describing
the actions the Secretary will take to ensure that the Mutual Mortgage
Insurance Fund attains the capital ratio required under paragraph (2).
(4) For purposes of this subsection:
(A) The term ``capital'' means the economic net worth of the
Mutual Mortgage Insurance Fund, as determined by the Secretary under
the annual audit required under section 1735f-16 of this title.
(B) The term ``capital ratio'' means the ratio of capital to
unamortized insurance-in-force.
(C) The term ``economic net worth'' means the current cash
available to the Fund, plus the net present value of all future cash
inflows and outflows expected to result from the outstanding
mortgages in the Fund.
(D) The term ``unamortized insurance-in-force'' means the
remaining obligation on outstanding mortgages which are obligations
of the Mutual Mortgage Insurance Fund, as estimated by the
Secretary.
(g) Annual independent audit of Mutual Mortgage Insurance Fund
The Secretary shall provide for an independent actuarial study of
the Mutual Mortgage Insurance Fund to be conducted annually and shall
report annually to the Congress regarding the financial status of the
Fund.
(h) Adjustment of premiums
(1) If, pursuant to the independent annual actuarial study of the
Mutual Mortgage Insurance Fund required under subsection (g) of this
section, the Secretary determines that the Mutual Mortgage Insurance
Fund is not meeting the operational goals under paragraph (2), the
Secretary may not issue distributions, and may, by regulation, propose
and implement any adjustments to the insurance premiums under section
1709(c) of this title or section 2103(b) of the Omnibus Budget
Reconciliation Act of 1990. Upon determining that a premium change is
appropriate under the preceding sentence, the Secretary shall
immediately notify Congress of the proposed change and the reasons for
the change. Any such premium change shall not take effect before the
expiration of the 90-day period beginning upon such notification.
(2) The operational goals referred to in paragraph (1) shall be--
(A) maintaining an adequate capital ratio;
(B) meeting the needs of homebuyers with low downpayments and
first-time homebuyers by providing access to mortgage credit;
(C) minimizing the risk to the Fund and to homeowners from
homeowner default; and
(D) avoiding adverse selection.
(June 27, 1934, ch. 847, title II, Sec. 205, 48 Stat. 1250; May 28,
1935, ch. 150, Sec. 29(b), 49 Stat. 300; Feb. 3, 1938, ch. 13, Sec. 3,
52 Stat. 15; June 3, 1939, ch. 175, Sec. 11, 53 Stat. 807; Apr. 20,
1950, ch. 94, title I, Sec. 122, 64 Stat. 59; June 30, 1953, ch. 170,
Sec. 4, 67 Stat. 122; Aug. 2, 1954, ch. 649, title I, Sec. 114, 68 Stat.
594; Pub. L. 90-19, Sec. 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L.
101-508, title II, Secs. 2104, 2105, Nov. 5, 1990, 104 Stat. 1388-19;
Pub. L. 102-550, title V, Sec. 508(a), Oct. 28, 1992, 106 Stat. 3782.)
References in Text
Section 2103(b) of the Omnibus Budget Reconciliation Act of 1990
[Pub. L. 101-508], referred to in subsec. (h)(1), is set out as a note
under section 1709 of this title.
Amendments
1992--Subsec. (c). Pub. L. 102-550 inserted at end ``The Secretary
shall not distribute any share to an eligible mortgagor under this
subsection beginning on the date which is 6 years after the date the
Secretary first transmitted written notification of eligibility to the
last known address of the mortgagor, unless the mortgagor has applied in
accordance with procedures prescribed by the Secretary for payment of
the share within the 6-year period. The Secretary shall transfer any
amounts no longer eligible for distribution under the previous sentence
from the Participating Reserve Account to the General Surplus Account.''
1990--Subsec. (e). Pub. L. 101-508, Sec. 2104, added subsec. (e).
Subsecs. (f) to (h). Pub. L. 101-508, Sec. 2105, added subsecs. (f)
to (h).
1967--Pub. L. 90-19 substituted ``Secretary'' for ``Commissioner''
wherever appearing in subsecs. (a) to (d) of this section.
1954--Act Aug. 2, 1954, amended section generally to eliminate the
former group accounts and substitute therefor a general surplus account
and participating reserve account.
1953--Subsec. (c). Act June 30, 1953, inserted sentence relating to
semi-annual transfer of group accounts, and, in remainder of section,
changed the provisions relating to settlement of accounts.
1950--Act Apr. 20, 1950, substituted ``Commissioner'' for
``Administrator'' wherever appearing.
1939--Subsec. (b). Act June 3, 1939, inserted ``prior to July 1,
1939''.
1938--Subsecs. (a) to (f). Act Feb. 3, 1938, amended provisions
generally, and among other changes, struck out subsec. (f).
1935--Subsec. (f). Act May 28, 1935, substituted ``annual premium
charge'' for ``premium charge'' in first sentence.
Exception to Statute of Limitations
Section 508(b) of Pub. L. 102-550 provided that: ``Notwithstanding
the 6-year limitation on distribution of shares of the Participating
Reserve Account under section 205(c) of the National Housing Act [12
U.S.C. 1711(c)], the Secretary shall distribute a share to an otherwise
eligible mortgagor in accordance with section 205(c), if the mortgagor
applies for payment of the share within 1 year after the date of
enactment of this Act [Oct. 28, 1992] in accordance with procedures in
effect on such date.''
Section Referred to in Other Sections
This section is referred to in section 1709 of this title.
