§ 1715z-17. — Shared appreciation mortgages for single family 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-17]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-17. Shared appreciation mortgages for single family
housing
(a) One- to four-family dwellings; requirements
Notwithstanding any provision of this subchapter that is
inconsistent with this section, the Secretary may insure, under any
provision of this subchapter providing for insurance of mortgages on
properties upon which there is located a dwelling designed principally
for occupancy by one to four families, a mortgage secured by a first
lien on such a property or on the stock allocated to a dwelling unit in
a residential cooperative housing corporation, which--
(1) provides for the mortgagee to share in a predetermined
percentage of the property's or stock's net appreciated value;
(2) bears interest at a rate which meets criteria prescribed by
the Secretary;
(3) provides for amortization over a period of not to exceed 30
years, but the actual term of the mortgage (excluding any
refinancing) may be not less than 10 nor more than 30 years, and
contains such provisions relating to refinancing of the principal
balance of the mortgage and any contingent deferred interest as the
Secretary may provide; and
(4) meets such other conditions as the Secretary may require by
regulation.
(b) Payment of mortgagee's share of net appreciated value; ``net
appreciated value'' defined
The mortgagee's share of a property's or stock's net appreciated
value shall be payable upon sale or transfer (as defined by the
Secretary) of the property or stock or payment in full of the mortgage,
whichever occurs first. For purposes of this section, the term ``net
appreciated value'' means the amount by which the sales price of the
property or stock (less the mortgagor's selling costs) exceeds the value
of the property or stock at the time the commitment to insure is issued
(with adjustments for capital improvements stipulated in the loan
contract). If there has been no sale or transfer at the time the
mortgagee's share of net appreciated value becomes payable, the sales
price for purposes of this section shall be determined by means of an
appraisal conducted in accordance with procedures approved by the
Secretary and provided for in the mortgage.
(c) Entitlement of mortgagee upon default
In the event of a default, the mortgagee shall be entitled to
receive the benefits of insurance in accordance with section 1710(a) of
this title, but such insurance benefits shall not include the
mortgagee's share of net appreciated value. The term ``original
principal obligation of the mortgage'' as used in section 1710 of this
title shall not include the mortgagee's share of net appreciated value.
(d) Inapplicability of State constitution, statute, etc., limiting or
prohibiting increases in outstanding loan balance
Mortgages insured pursuant to this section which contain provisions
for sharing appreciation or which otherwise require or permit increases
in the outstanding loan balance which are authorized under this section
or under applicable regulations shall not be subject to any State
constitution, statute, court decree, common law, rule, or public policy
limiting or prohibiting increases in the outstanding loan balance after
execution of the mortgage.
(e) Encouraged use of insurance by low and moderate income families
In carrying out the provisions of this section, the Secretary shall
encourage the use of insurance under this section by low and moderate
income tenants who would otherwise be displaced by the conversion of
their rental housing to condominium or cooperative ownership.
(f) Consumer protections and disclosure requirements
The Secretary shall prescribe adequate consumer protections and
disclosure requirements with respect to mortgages insured under this
section, and may prescribe such other terms and conditions as may be
appropriate to carry out the provisions of this section.
(g) Number of mortgages and loans
The aggregate number of mortgages and loans insured under this
section and section 1715z-10(c) of this title in any fiscal year may not
exceed 10 percent of the aggregate number of mortgages and loans insured
by the Secretary under this subchapter during the preceding fiscal year.
(June 27, 1934, ch. 847, title II, Sec. 252, as added Pub. L. 98-181,
title IV, Sec. 444, Nov. 30, 1983, 97 Stat. 1225; amended Pub. L. 100-
242, title IV, Sec. 415(b)(2), Feb. 5, 1988, 101 Stat. 1907.)
Amendments
1988--Subsec. (g). Pub. L. 100-242 struck out reference to section
1715z-16 of this title.
Section Referred to in Other Sections
This section is referred to in sections 1709, 1715z-10 of this
title.
