§ 1715u. — Authority to assist mortgagors in default.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1715u]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715u. Authority to assist mortgagors in default
(a) Loss mitigation
Upon default of any mortgage insured under this subchapter,
mortgagees shall engage in loss mitigation actions for the purpose of
providing an alternative to foreclosure (including but not limited to
actions such as special forbearance, loss modification, and deeds in
lieu of foreclosure, but not including assignment of mortgages to the
Secretary under section 1710(a)(1)(A) of this title) as provided in
regulations by the Secretary.
(b) Payment of partial claim
The Secretary may establish a program for payment of a partial claim
to a mortgagee that agrees to apply the claim amount to payment of a
mortgage on a 1- to 4-family residence that is in default. Any such
payment under such program to the mortgagee shall be made in the sole
discretion of the Secretary and on terms and conditions acceptable to
the Secretary, except that--
(1) the amount of the payment shall be in an amount determined
by the Secretary, not to exceed an amount equivalent to 12 of the
monthly mortgage payments and any costs related to the default that
are approved by the Secretary; and
(2) the mortgagor shall agree to repay the amount of the
insurance claim to the Secretary upon terms and conditions
acceptable to the Secretary.
The Secretary may pay the mortgagee, from the appropriate insurance
fund, in connection with any activities that the mortgagee is required
to undertake concerning repayment by the mortgagor of the amount owed to
the Secretary.
(c) Assignment
(1) Program authority
The Secretary may establish a program for assignment to the
Secretary, upon request of the mortgagee, of a mortgage on a 1- to
4-family residence insured under this chapter.
(2) Program requirements
The Secretary may accept assignment of a mortgage under a
program under this subsection only if--
(A) the mortgage was in default;
(B) the mortgagee has modified the mortgage to cure the
default and provide for mortgage payments within the reasonable
ability of the mortgagor to pay, at interest rates not exceeding
current market interest rates; and
(C) the Secretary arranges for servicing of the assigned
mortgage by a mortgagee (which may include the assigning
mortgagee) through procedures that the Secretary has determined
to be in the best interests of the appropriate insurance fund.
(3) Payment of insurance benefits
Upon accepting assignment of a mortgage under a program
established under this subsection, the Secretary may pay insurance
benefits to the mortgagee from the appropriate insurance fund, in an
amount that the Secretary determines to be appropriate, not to
exceed the amount necessary to compensate the mortgagee for the
assignment and any losses and expenses resulting from the mortgage
modification.
(d) Prohibition of judicial review
No decision by the Secretary to exercise or forego exercising any
authority under this section shall be subject to judicial review.
(e) Repealed. Pub. L. 104-134, title I, Sec. 101(e) [title II,
Sec. 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321-257, 1321-291;
renumbered title I, Pub. L. 104-140, Sec. 1(a), May 2, 1996, 110
Stat. 1327
(f) Applicability of other laws
No provision of this chapter, or any other law, shall be construed
to require the Secretary to provide an alternative to foreclosure for
mortgagees with mortgages on 1- to 4-family residences insured by the
Secretary under this chapter, or to accept assignments of such
mortgages.
(June 27, 1934, ch. 847, title II, Sec. 230, as added Pub. L. 86-372,
title I, Sec. 114(a), Sept. 23, 1959, 73 Stat. 662; amended Pub. L. 88-
560, title I, Sec. 104(b), Sept. 2, 1964, 78 Stat. 770; Pub. L. 90-19,
Sec. 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 96-399, title III,
Sec. 341, Oct. 8, 1980, 94 Stat. 1659; Pub. L. 98-181, title IV,
Sec. 418, Nov. 30, 1983, 97 Stat. 1212; Pub. L. 100-242, title IV,
Sec. 428, Feb. 5, 1988, 101 Stat. 1918; Pub. L. 102-83, Sec. 5(c)(2),
Aug. 6, 1991, 105 Stat. 406; Pub. L. 104-99, title IV, Sec. 407(b), Jan.
26, 1996, 110 Stat. 45; Pub. L. 104-134, title I, Sec. 101(e) [title II,
Sec. 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321-257, 1321-291; renumbered
title I, Pub. L. 104-140, Sec. 1(a), May 2, 1996, 110 Stat. 1327; Pub.
L. 105-276, title VI, Sec. 601(f), Oct. 21, 1998, 112 Stat. 2674.)
Amendments
1998--Pub. L. 105-276 added subsec. (a) and redesignated former
subsecs. (a) to (e) as (b) to (f), respectively.
1996--Pub. L. 104-99 amended section generally, substituting
subsecs. (a) to (e) relating to authority to assist mortgagors in
default for former subsecs. (a) to (d) relating to temporary mortgage
assistance payments and acquisition of mortgages to avoid foreclosures.
Subsec. (d). Pub. L. 104-134 struck out heading and text of subsec.
(d). Text read as follows: ``Any mortgage for which the mortgagor has
applied to the Secretary, before the date of enactment of the
Departments of Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act, 1996, for assignment pursuant
to subsection (b) of this section as in effect before such date of
enactment shall continue to be governed by the provisions of this
section, as in effect immediately before such date of enactment.''
1991--Subsec. (a)(5). Pub. L. 102-83 substituted ``section 3703(c)
of title 38'' for ``section 1803(c) of title 38''.
1988--Subsec. (a)(5). Pub. L. 100-242 substituted ``The interest
rate on payments made under this subsection shall be the rate
established under section 1803(c) of title 38. The interest rate to be
charged shall be determined when the Secretary approves assistance under
this subsection'' for ``The Secretary may establish interest charges on
payments made under this subsection; except that such charges shall not
exceed a rate which is more than the maximum interest rate applicable
with respect to level payment mortgages insured pursuant to section
1709(b) of this title at the time assistance under this section is
approved by the Secretary.''
1983--Subsec. (d). Pub. L. 98-181 struck out ``, to the extent
practicable,'' after ``Secretary shall''.
1980--Subsec. (a). Pub. L. 96-399 added subsec. (a). Existing
undesignated provisions were designated as subsec. (b)(1).
Subsec. (b). Pub. L. 96-399 designated existing undesignated
provision as par. (1), made changes in phraseology which included
applicability of remedy provided by subsection (a) of this section and
determinations made pursuant to such subsection, and added pars. (2) and
(3).
Subsecs. (c), (d). Pub. L. 96-399 added subsecs. (c) and (d).
1967--Pub. L. 90-19 substituted ``Secretary'' for ``Commissioner''
wherever appearing.
1964--Pub. L. 88-560 authorized the Commissioner to acquire the loan
and security notwithstanding the fact that he has previously approved a
request of the mortgagee for an extension of the time for curing the
default and of the time for commencing foreclosure proceedings or for
otherwise acquiring title to the mortgaged property or has approved a
modification of the mortgage for the purpose of changing the
amortization provisions by recasting the unpaid balance and substituted
provisions for acquisition of the loan and security upon payment of the
insurance benefits in an amount equal to the unpaid principal balance of
the loan plus any unpaid mortgage interest plus reimbursement for such
costs and attorney's fees as the Commissioner finds were properly
incurred in connection with the defaulted mortgage and its assignment to
the Commissioner for former provision for such acquisition upon issuance
to the mortgagee of debentures having a total face value equal to the
unpaid principal balance of the loan plus any accrued interest.
Effective Date of 1996 Amendment
Amendment by Pub. L. 104-99 applicable with respect to mortgages
insured under this chapter that are executed before, on, or after Oct.
1, 1997, see section 407(c) of Pub. L. 104-99, as amended, set out as a
note under section 1710 of this title.
Savings Provision
Section 101(e) [title II, Sec. 221(b)(1)] of Pub. L. 104-134
provided that: ``Any mortgage for which the mortgagor has applied to the
Secretary, before the date of enactment of this Act [Apr. 26, 1996], for
assignment to the Secretary pursuant to section 230(b) of the National
Housing Act [12 U.S.C. 1715u(b)] shall continue to be governed by the
provisions of such section, as in effect immediately before enactment of
the Balanced Budget Downpayment Act, I [Pub. L. 104-99, which was
approved Jan. 26, 1996].''
Section Referred to in Other Sections
This section is referred to in sections 1710, 1735f-14 of this
title.
