§ 1715z-14. — Risksharing demonstration.
[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-14]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-14. Risk-sharing demonstration
(a) Demonstration mortgage risk-sharing program; areas; number of
mortgages
The purpose of this section is to authorize a demonstration mortgage
risk-sharing program designed to test the feasibility of entering into
risk-sharing contracts with private mortgage insurers and with insured
community development financial institutions in order to reduce
Government risk and administrative costs, and to speed mortgage
processing. The Secretary shall limit the demonstration under this
section to not more than four administrative regions of the Department
of Housing and Urban Development, and shall assure that the program is
in the financial interest of the Government and will not result in loss
of employment by any employees of the Department of Housing and Urban
Development before the expiration of the 5-year period beginning on
December 21, 2000. The aggregate number of mortgages for which risk of
nonpayment is shared under this section in any administrative region of
the Department of Housing and Urban Development in any fiscal year may
not exceed 20 percent of the aggregate number of mortgages and loans
insured by the Secretary under this subchapter in such region during the
preceding fiscal year.
(b) One- to four-family dwellings; requirements for private mortgage
insurance companies
Notwithstanding any other provision of this chapter inconsistent
with this section, the Secretary is authorized, in providing mortgage
insurance with respect to one- to four-family dwellings under sections
1709(b), 1715y, and 1715z-10 of this title, to enter into risk-sharing
contracts with private mortgage insurance companies which have been
determined to be qualified insurers under section 1717(b)(2)(C) of this
title and with insured community development financial institutions.
Such contracts shall require private mortgage insurance companies and
insured community development financial institutions to--
(1) assume a secondary percentage of loss on any mortgage
insured pursuant to section 1709(b), 1715y, or 1715z-10 of this
title covering a one- to four-family dwelling, which percentage of
loss shall be set forth in the risk-sharing contract, with the first
percentage of loss to be borne by the Secretary; \1\
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\1\ So in original. Probably should be followed by ``and''.
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(2) perform or delegate underwriting, credit approval,
appraisal, inspection, commitment, claims processing, property
disposition, or other functions as the Secretary shall approve as
consistent with the purposes of this section and shall set forth in
the risk-sharing contract.
(c) Required contract provisions
Any contract for risk-sharing under this section shall contain such
provisions relating to the sharing of premiums received by the Secretary
with a private mortgage insurer or insured community development
financial institution on a sound actuarial basis, establishment of loss
reserves, manner of calculating claims on such risk-sharing contract,
conditions with respect to foreclosure, handling and disposition of
property prior to claim or settlement, rights of assignees, and other
similar matters as the Secretary may prescribe pursuant to regulations.
Pursuant to a contract under this section, a private mortgage insurance
company or insured community development financial institution shall
endorse loans for risk-sharing and take such other actions on behalf of
the Secretary and in the Secretary's name as the Secretary may
authorize.
(d) Mortgages offered for inclusion by Secretary
The Secretary shall require any private mortgage insurance company
or insured community development financial institution participating in
the program under this section to provide risk-sharing for those
mortgages offered by the Secretary for inclusion in the program.
(e) Insured community development financial institution
For purposes of this section, the term ``insured community
development financial institution'' means a community development
financial institution, as such term is defined in section 4702 of this
title that is an insured depository institution (as such term is defined
in section 1813 of this title) or an insured credit union (as such term
is defined in section 1752 of this title).
(June 27, 1934, ch. 847, title II, Sec. 249, as added Pub. L. 98-181,
title IV, Sec. 428(a), Nov. 30, 1983, 97 Stat. 1219; amended Pub. L. 99-
120, Sec. 1(g), Oct. 8, 1985, 99 Stat. 502; Pub. L. 99-156, Sec. 1(g),
Nov. 15, 1985, 99 Stat. 815; Pub. L. 99-219, Sec. 1(g), Dec. 26, 1985,
99 Stat. 1730; Pub. L. 99-267, Sec. 1(g), Mar. 27, 1986, 100 Stat. 73;
Pub. L. 99-272, title III, Sec. 3007(g), Apr. 7, 1986, 100 Stat. 105;
Pub. L. 99-289, Sec. 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99-345,
Sec. 1, June 24, 1986, 100 Stat. 673; Pub. L. 99-430, Sept. 30, 1986,
100 Stat. 986; Pub. L. 100-122, Sec. 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. 106-554, Sec. 1(a)(7)
[title I, Sec. 143], Dec. 21, 2000, 114 Stat. 2763, 2763A-618.)
Amendments
2000--Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(1)],
substituted ``Risk-sharing demonstration'' for ``Reinsurance contracts''
in section catchline.
Subsec. (a). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(2),
(3)], in heading and first sentence substituted ``risk-sharing'' for
``reinsurance'' wherever appearing, in first sentence inserted ``and
with insured community development financial institutions'' after
``private mortgage insurers'', in second sentence substituted ``four
administrative regions'' for ``two administrative regions'' and ``the
expiration of the 5-year period beginning on December 21, 2000'' for
``March 15, 1988'', and in last sentence substituted ``mortgages for
which risk of nonpayment is shared'' for ``mortgages insured'' and ``20
percent'' for ``10 percent''.
Subsec. (b). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(2),
(4)(A), (B)], in first sentence of introductory provisions, substituted
``, in providing'' for ``to provide'', ``, to enter into'' for
``through'' and ``risk-sharing'' for ``reinsurance'' and inserted ``and
with insured community development financial institutions'' before
period at end and, in second sentence of introductory provisions,
inserted ``and insured community development financial institutions''
after ``private mortgage insurance companies''.
Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 143(4)(C)], added par. (1) and struck out former par. (1) which
read as follows: ``assume a percentage of loss on any mortgage insured
pursuant to section 1709(b), 1715y, or 1715z-10 of this title covering a
one- to four-family dwelling, which percentage of loss shall be set
forth in the risk-sharing contract; and''.
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(2)], substituted
``risk-sharing'' for ``reinsurance''.
Subsec. (b)(2). Pub. L. 106-554, Sec. 1(a)(7) [title I,
Sec. 143(4)(D)], substituted ``perform or delegate underwriting,'' for
``carry out (under appropriate delegation) such'' and ``functions as the
Secretary'' for ``function as the Secretary pursuant to regulations,''
and inserted before period at end ``and shall set forth in the risk-
sharing contract''.
Subsec. (c). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(2),
(5)], in first sentence, substituted ``contract for'' for ``contract
of'' and ``risk-sharing'' for ``reinsurance'', inserted ``received by
the Secretary with a private mortgage insurer or insured community
development financial institution'' after ``sharing of premiums'',
substituted ``loss reserves'' for ``insurance reserves'', ``such risk-
sharing contract'' for ``such insurance'', and ``rights of assignees''
for ``right of assignees'' and, in second sentence, inserted ``or
insured community development financial institution'' after ``private
mortgage insurance company'' and substituted ``loans for risk-sharing''
for ``loans for insurance''.
Subsec. (d). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(2),
(6)], inserted ``or insured community development financial
institution'' after ``private mortgage insurance company'' and
substituted ``risk-sharing'' for ``reinsurance''.
Subsec. (e). Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 143(7)],
added subsec. (e).
1987--Subsec. (a). Pub. L. 100-200 substituted ``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--Subsec. (a). Pub. L. 99-430 substituted ``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--Subsec. (a). Pub. L. 99-219 substituted ``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''.
Evaluation of Reinsurance Program; Report to Congress
Section 428(b) of Pub. L. 98-181 provided that: ``The Secretary of
Housing and Urban Development shall evaluate the reinsurance program
under section 249 of the National Housing Act [this section] and, not
later than March 1, 1985, submit to the Congress a report setting forth
the results of such evaluation. Such report shall include an evaluation
of the possible effect of a reinsurance program on the characteristics
of the pool of mortgages remaining wholly under the applicable insurance
funds and the actuarial soundness of such funds under such conditions.''
