§ 1715z-13b. — Loan guarantees for Native Hawaiian housing.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1715z-13b]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-13b. Loan guarantees for Native Hawaiian housing
(a) Definitions
In this section:
(1) Department of Hawaiian Home Lands
The term ``Department of Hawaiian Home Lands'' means the agency
or department of the government of the State of Hawaii that is
responsible for the administration of the Hawaiian Homes Commission
Act, 1920 (42 Stat. 108 et seq.).
(2) Eligible entity
The term ``eligible entity'' means a Native Hawaiian family, the
Department of Hawaiian Home Lands, the Office of Hawaiian Affairs,
and private nonprofit or private for-profit organizations
experienced in the planning and development of affordable housing
for Native Hawaiians.
(3) Family
The term ``family'' means one or more persons maintaining a
household, as the Secretary shall by regulation provide.
(4) Guarantee Fund
The term ``Guarantee Fund'' means the Native Hawaiian Housing
Loan Guarantee Fund established under subsection (j) of this
section.
(5) Hawaiian Home Lands
The term ``Hawaiian Home Lands'' means lands that--
(A) have the status of Hawaiian Home Lands under section 204
of the Hawaiian Homes Commission Act (42 Stat. 110); or
(B) are acquired pursuant to that Act.
(6) Native Hawaiian
The term ``Native Hawaiian'' means any individual who is--
(A) a citizen of the United States; and
(B) a descendant of the aboriginal people, who, prior to
1778, occupied and exercised sovereignty in the area that
currently constitutes the State of Hawaii, as evidenced by--
(i) genealogical records;
(ii) verification by kupuna (elders) or kama'aina (long-
term community residents); or
(iii) birth records of the State of Hawaii.
(7) Office of Hawaiian Affairs
The term ``Office of Hawaiian Affairs'' means the entity of that
name established under the constitution of the State of Hawaii.
(b) Authority
To provide access to sources of private financing to Native Hawaiian
families who otherwise could not acquire housing financing because of
the unique legal status of the Hawaiian Home Lands or as a result of a
lack of access to private financial markets, the Secretary may guarantee
an amount not to exceed 100 percent of the unpaid principal and interest
that is due on an eligible loan under subsection (c) of this section.
(c) Eligible loans
Under this section, a loan is an eligible loan if that loan meets
the following requirements:
(1) Eligible borrowers
The loan is made only to a borrower who is--
(A) a Native Hawaiian family;
(B) the Department of Hawaiian Home Lands;
(C) the Office of Hawaiian Affairs; or
(D) a private nonprofit organization experienced in the
planning and development of affordable housing for Native
Hawaiians.
(2) Eligible housing
(A) In general
The loan will be used to construct, acquire, or rehabilitate
not more than 4-family dwellings that are standard housing and
are located on Hawaiian Home Lands for which a housing plan
described in subparagraph (B) applies.
(B) Housing plan
A housing plan described in this subparagraph is a housing
plan that--
(i) has been submitted and approved by the Secretary
under section 4223 of title 25; and
(ii) provides for the use of loan guarantees under this
section to provide affordable homeownership housing on
Hawaiian Home Lands.
(3) Security
The loan may be secured by any collateral authorized under
applicable Federal or State law.
(4) Lenders
(A) In general
The loan shall be made only by a lender approved by, and
meeting qualifications established by, the Secretary, including
any lender described in subparagraph (B), except that a loan
otherwise insured or guaranteed by an agency of the Federal
Government or made by the Department of Hawaiian Home Lands from
amounts borrowed from the United States shall not be eligible
for a guarantee under this section.
(B) Approval
The following lenders shall be considered to be lenders that
have been approved by the Secretary:
(i) Any mortgagee approved by the Secretary for
participation in the single family mortgage insurance
program under title II of the National Housing Act [12
U.S.C. 1707 et seq.].
(ii) Any lender that makes housing loans under chapter
37 of title 38 that are automatically guaranteed under
section 3702(d) of title 38.
(iii) Any lender approved by the Secretary of
Agriculture to make guaranteed loans for single family
housing under the Housing Act of 1949 [42 U.S.C. 1441 et
seq.].
(iv) Any other lender that is supervised, approved,
regulated, or insured by any agency of the Federal
Government.
(5) Terms
The loan shall--
(A) be made for a term not exceeding 30 years;
(B) bear interest (exclusive of the guarantee fee under
subsection (e) of this section and service charges, if any) at a
rate agreed upon by the borrower and the lender and determined
by the Secretary to be reasonable, but not to exceed the rate
generally charged in the area (as determined by the Secretary)
for home mortgage loans not guaranteed or insured by any agency
or instrumentality of the Federal Government;
(C) involve a principal obligation not exceeding--
(i) 97.75 percent of the appraised value of the property
as of the date the loan is accepted for guarantee (or 98.75
percent if the value of the property is $50,000 or less); or
(ii) the amount approved by the Secretary under this
section; and
(D) involve a payment on account of the property--
(i) in cash or its equivalent; or
(ii) through the value of any improvements to the
property made through the skilled or unskilled labor of the
borrower, as the Secretary shall provide.
(d) Certificate of guarantee
(1) Approval process
(A) In general
Before the Secretary approves any loan for guarantee under
this section, the lender shall submit the application for the
loan to the Secretary for examination.
(B) Approval
If the Secretary approves the application submitted under
subparagraph (A), the Secretary shall issue a certificate under
this subsection as evidence of the loan guarantee approved.
(2) Standard for approval
The Secretary may approve a loan for guarantee under this
section and issue a certificate under this subsection only if the
Secretary determines that there is a reasonable prospect of
repayment of the loan.
(3) Effect
(A) In general
A certificate of guarantee issued under this subsection by
the Secretary shall be conclusive evidence of the eligibility of
the loan for guarantee under this section and the amount of that
guarantee.
(B) Evidence
The evidence referred to in subparagraph (A) shall be
incontestable in the hands of the bearer.
(C) Full faith and credit
The full faith and credit of the United States is pledged to
the payment of all amounts agreed to be paid by the Secretary as
security for the obligations made by the Secretary under this
section.
(4) Fraud and misrepresentation
This subsection may not be construed--
(A) to preclude the Secretary from establishing defenses
against the original lender based on fraud or material
misrepresentation; or
(B) to bar the Secretary from establishing by regulations
that are on the date of issuance or disbursement, whichever is
earlier, partial defenses to the amount payable on the
guarantee.
(e) Guarantee fee
(1) In general
The Secretary shall fix and collect a guarantee fee for the
guarantee of a loan under this section, which may not exceed the
amount equal to 1 percent of the principal obligation of the loan.
(2) Payment
The fee under this subsection shall--
(A) be paid by the lender at time of issuance of the
guarantee; and
(B) be adequate, in the determination of the Secretary, to
cover expenses and probable losses.
(3) Deposit
The Secretary shall deposit any fees collected under this
subsection in the Native Hawaiian Housing Loan Guarantee Fund
established under subsection (j) of this section.
(f) Liability under guarantee
The liability under a guarantee provided under this section shall
decrease or increase on a pro rata basis according to any decrease or
increase in the amount of the unpaid obligation under the provisions of
the loan agreement involved.
(g) Transfer and assumption
Notwithstanding any other provision of law, any loan guaranteed
under this section, including the security given for the loan, may be
sold or assigned by the lender to any financial institution subject to
examination and supervision by an agency of the Federal Government or of
any State or the District of Columbia.
(h) Disqualification of lenders and civil money penalties
(1) In general
(A) Grounds for action
The Secretary may take action under subparagraph (B) if the
Secretary determines that any lender or holder of a guarantee
certificate under subsection (d) of this section--
(i) has failed--
(I) to maintain adequate accounting records;
(II) to service adequately loans guaranteed under
this section; or
(III) to exercise proper credit or underwriting
judgment; or
(ii) has engaged in practices otherwise detrimental to
the interest of a borrower or the United States.
(B) Actions
Upon a determination by the Secretary that a holder of a
guarantee certificate under subsection (d) of this section has
failed to carry out an activity described in subparagraph (A)(i)
or has engaged in practices described in subparagraph (A)(ii),
the Secretary may--
(i) refuse, either temporarily or permanently, to
guarantee any further loans made by such lender or holder;
(ii) bar such lender or holder from acquiring additional
loans guaranteed under this section; and
(iii) require that such lender or holder assume not less
than 10 percent of any loss on further loans made or held by
the lender or holder that are guaranteed under this section.
(2) Civil money penalties for intentional violations
(A) In general
The Secretary may impose a civil monetary penalty on a
lender or holder of a guarantee certificate under subsection (d)
of this section if the Secretary determines that the holder or
lender has intentionally failed--
(i) to maintain adequate accounting records;
(ii) to adequately service loans guaranteed under this
section; or
(iii) to exercise proper credit or underwriting
judgment.
(B) Penalties
A civil monetary penalty imposed under this paragraph shall
be imposed in the manner and be in an amount provided under
section 536 of the National Housing Act [12 U.S.C. 1735f-14]
with respect to mortgagees and lenders under that Act.
(3) Payment on loans made in good faith
Notwithstanding paragraphs (1) and (2), if a loan was made in
good faith, the Secretary may not refuse to pay a lender or holder
of a valid guarantee on that loan, without regard to whether the
lender or holder is barred under this subsection.
(i) Payment under guarantee
(1) Lender options
(A) In general
(i) Notification
If a borrower on a loan guaranteed under this section
defaults on the loan, the holder of the guarantee
certificate shall provide written notice of the default to
the Secretary.
(ii) Payment
Upon providing the notice required under clause (i), the
holder of the guarantee certificate shall be entitled to
payment under the guarantee (subject to the provisions of
this section) and may proceed to obtain payment in one of
the following manners:
(I) Foreclosure
(aa) In general
The holder of the certificate may initiate
foreclosure proceedings (after providing written
notice of that action to the Secretary).
(bb) Payment
Upon a final order by the court authorizing
foreclosure and submission to the Secretary of a
claim for payment under the guarantee, the Secretary
shall pay to the holder of the certificate the pro
rata portion of the amount guaranteed (as determined
pursuant to subsection (f) of this section) plus
reasonable fees and expenses as approved by the
Secretary.
(cc) Subrogation
The rights of the Secretary shall be subrogated
to the rights of the holder of the guarantee. The
holder shall assign the obligation and security to
the Secretary.
(II) No foreclosure
(aa) In general
Without seeking foreclosure (or in any case in
which a foreclosure proceeding initiated under
clause (i) continues for a period in excess of 1
year), the holder of the guarantee may submit to the
Secretary a request to assign the obligation and
security interest to the Secretary in return for
payment of the claim under the guarantee. The
Secretary may accept assignment of the loan if the
Secretary determines that the assignment is in the
best interest of the United States.
(bb) Payment
Upon assignment, the Secretary shall pay to the
holder of the guarantee the pro rata portion of the
amount guaranteed (as determined under subsection
(f) of this section).
(cc) Subrogation
The rights of the Secretary shall be subrogated
to the rights of the holder of the guarantee. The
holder shall assign the obligation and security to
the Secretary.
(B) Requirements
Before any payment under a guarantee is made under
subparagraph (A), the holder of the guarantee shall exhaust all
reasonable possibilities of collection. Upon payment, in whole
or in part, to the holder, the note or judgment evidencing the
debt shall be assigned to the United States and the holder shall
have no further claim against the borrower or the United States.
The Secretary shall then take such action to collect as the
Secretary determines to be appropriate.
(2) Limitations on liquidation
(A) In general
If a borrower defaults on a loan guaranteed under this
section that involves a security interest in restricted Hawaiian
Home Land property, the mortgagee or the Secretary shall only
pursue liquidation after offering to transfer the account to
another eligible Hawaiian family or the Department of Hawaiian
Home Lands.
(B) Limitation
If, after action is taken under subparagraph (A), the
mortgagee or the Secretary subsequently proceeds to liquidate
the account, the mortgagee or the Secretary shall not sell,
transfer, or otherwise dispose of or alienate the property
described in subparagraph (A) except to another eligible
Hawaiian family or to the Department of Hawaiian Home Lands.
(j) Hawaiian Housing Loan Guarantee Fund
(1) Establishment
There is established in the Treasury of the United States the
Hawaiian Housing Loan Guarantee Fund for the purpose of providing
loan guarantees under this section.
(2) Credits
The Guarantee Fund shall be credited with--
(A) any amount, claims, notes, mortgages, contracts, and
property acquired by the Secretary under this section, and any
collections and proceeds therefrom;
(B) any amounts appropriated pursuant to paragraph (7);
(C) any guarantee fees collected under subsection (e) of
this section; and
(D) any interest or earnings on amounts invested under
paragraph (4).
(3) Use
Amounts in the Guarantee Fund shall be available, to the extent
provided in appropriations Acts, for--
(A) fulfilling any obligations of the Secretary with respect
to loans guaranteed under this section, including the costs (as
that term is defined in section 661a of title 2) of such loans;
(B) paying taxes, insurance, prior liens, expenses necessary
to make fiscal adjustment in connection with the application and
transmittal of collections, and other expenses and advances to
protect the Secretary for loans which are guaranteed under this
section or held by the Secretary;
(C) acquiring such security property at foreclosure sales or
otherwise;
(D) paying administrative expenses in connection with this
section; and
(E) reasonable and necessary costs of rehabilitation and
repair to properties that the Secretary holds or owns pursuant
to this section.
(4) Investment
Any amounts in the Guarantee Fund determined by the Secretary to
be in excess of amounts currently required at the time of the
determination to carry out this section may be invested in
obligations of the United States.
(5) Limitation on commitments to guarantee loans and
mortgages
(A) Requirement of appropriations
The authority of the Secretary to enter into commitments to
guarantee loans under this section shall be effective for any
fiscal year to the extent, or in such amounts as are, or have
been, provided in appropriations Acts, without regard to the
fiscal year for which such amounts were appropriated.
(B) Limitations on costs of guarantees
The authority of the Secretary to enter into commitments to
guarantee loans under this section shall be effective for any
fiscal year only to the extent that amounts in the Guarantee
Fund are or have been made available in appropriations Acts to
cover the costs (as that term is defined in section 661a of
title 2) of such loan guarantees for such fiscal year. Any
amounts appropriated pursuant to this subparagraph shall remain
available until expended.
(C) Limitation on outstanding aggregate principal amount
Subject to the limitations in subparagraphs (A) and (B), the
Secretary may enter into commitments to guarantee loans under
this section for each of fiscal years 2001, 2002, 2003, 2004,
and 2005 with an aggregate outstanding principal amount not
exceeding $100,000,000 for each such fiscal year.
(6) Liabilities
All liabilities and obligations of the assets credited to the
Guarantee Fund under paragraph (2)(A) shall be liabilities and
obligations of the Guarantee Fund.
(7) Authorization of appropriations
There are authorized to be appropriated to the Guarantee Fund to
carry out this section such sums as may be necessary for each of
fiscal years 2001, 2002, 2003, 2004, and 2005.
(k) Requirements for standard housing
(1) In general
The Secretary shall, by regulation, establish housing safety and
quality standards to be applied for use under this section.
(2) Standards
The standards referred to in paragraph (1) shall--
(A) provide sufficient flexibility to permit the use of
various designs and materials in housing acquired with loans
guaranteed under this section; and
(B) require each dwelling unit in any housing acquired in
the manner described in subparagraph (A) to--
(i) be decent, safe, sanitary, and modest in size and
design;
(ii) conform with applicable general construction
standards for the region in which the housing is located;
(iii) contain a plumbing system that--
(I) uses a properly installed system of piping;
(II) includes a kitchen sink and a partitional
bathroom with lavatory, toilet, and bath or shower; and
(III) uses water supply, plumbing, and sewage
disposal systems that conform to any minimum standards
established by the applicable county or State;
(iv) contain an electrical system using wiring and
equipment properly installed to safely supply electrical
energy for adequate lighting and for operation of appliances
that conforms to any appropriate county, State, or national
code;
(v) be not less than the size provided under the
applicable locally adopted standards for size of dwelling
units, except that the Secretary, upon request of the
Department of Hawaiian Home Lands may waive the size
requirements under this paragraph; and
(vi) conform with the energy performance requirements
for new construction established by the Secretary under
section 526(a) of the National Housing Act [12 U.S.C. 1735f-
4(a)], unless the Secretary determines that the requirements
are not applicable.
(l) Applicability of civil rights statutes
To the extent that the requirements of title VI of the Civil Rights
Act of 1964 (42 U.S.C. 2000d et seq.) or of the Fair Housing Act [42
U.S.C. 3601 et seq.] apply to a guarantee provided under this
subsection, nothing in the requirements concerning discrimination on the
basis of race shall be construed to prevent the provision of the
guarantee to an eligible entity on the basis that the entity serves
Native Hawaiian families or is a Native Hawaiian family.
(Pub. L. 102-550, title I, Sec. 184A, as added Pub. L. 106-568, title
II, Sec. 204, Dec. 27, 2000, 114 Stat. 2895, and Pub. L. 106-569, title
V, Sec. 514, Dec. 27, 2000, 114 Stat. 2989.)
References in Text
The Hawaiian Homes Commission Act, 1920, referred to in subsec.
(a)(1), (5), is act July 9, 1921, ch. 42, 42 Stat. 108, as amended,
which was classified generally to sections 691 to 718 of Title 48,
Territories and Insular Possessions, and was omitted from the Code.
Section 204 of the Act was classified to section 698 of Title 48.
The National Housing Act, referred to in subsecs. (c)(4)(B)(i) and
(h)(2)(B), is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended,
which is classified principally to this chapter (Sec. 1701 et seq.).
Title II of the Act is classified generally to this subchapter
(Sec. 1707 et seq.). For complete classification of this Act to the
Code, see section 1701 of this title and Tables.
The Housing Act of 1949, referred to in subsec. (c)(4)(B)(iii), is
act July 15, 1949, ch. 338, 63 Stat. 413, as amended, which is
classified principally to chapter 8A (Sec. 1441 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 1441 of Title 42
and Tables.
The Civil Rights Act of 1964, referred to in subsec. (l), is Pub. L.
88-352, July 2, 1964, 78 Stat. 241, as amended. Title VI of the Act is
classified generally to subchapter V (Sec. 2000d et seq.) of chapter 21
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
2000a of Title 42 and Tables.
The Fair Housing Act, referred to in subsec. (l), is title VIII of
Pub. L. 90-284, Apr. 11, 1968, 82 Stat. 81, as amended, which is
classified principally to subchapter I (Sec. 3601 et seq.) of chapter 45
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 3601
of Title 42 and Tables.
Codification
Section was enacted as part of the Housing and Community Development
Act of 1992, and not as part of the National Housing Act which comprises
this chapter.
Pub. L. 106-568, Sec. 204, and Pub. L. 106-569, Sec. 514, enacted
substantially identical sections 184A to Pub. L. 102-550. This section
is based on the text of section 184A of Pub. L. 102-550, as added by
Pub. L. 106-569.
Section Referred to in Other Sections
This section is referred to in title 25 sections 4223, 4228, 4242.
