§ 1715z-18. — Shared appreciation mortgages for multifamily 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-18]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-18. Shared appreciation mortgages for multifamily
housing
(a) Five or more family units; 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 including 5 or more family units, a mortgage secured by a
first lien on the property that (1) provides for the mortgagee to share
in a predetermined percentage of the property's net appreciated value;
and (2) meets such other conditions, including limitations on the rate
of interest which may be charged, as the Secretary may require by
regulation.
(b) Payment of mortgagee's share of net appreciated value; term of
mortgage; repayment; ``net appreciated value'' defined
The mortgagee's share of a property's net appreciated value shall be
payable upon maturity or upon payment in full of the loan or sale or
transfer (as defined by the Secretary) of the property, whichever occurs
first. The term of the mortgage shall not be less than 15 years, and
shall be repayable in equal monthly installments of principal and fixed
interest during the mortgage term in an amount which would be sufficient
to retire a debt with the same principal and fixed interest rate over a
period not exceeding 30 years. In the case of a mortgage which will not
be completely amortized during the mortgage term, the principal
obligation of the mortgage may not exceed 85 percent of the estimated
value of the property or project. For purposes of this section, the term
``net appreciated value'' means the amount by which the sales price of
the property (less the mortgagor's selling costs) exceeds the actual
project cost after completion, as approved by the Secretary. 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 1713 of
this title, but such insurance benefits shall not include the
mortgagee's share of net appreciated value. The term ``original
principal face amount of the mortgage'' as used in section 1713 of this
title shall not include the mortgagee's share of net appreciated value.
(d) Maximum percentage of net appreciated value; disclosure requirements
The Secretary shall establish by regulation the maximum percentage
of net appreciated value which may be payable to a mortgagee as the
mortgagee's share. The Secretary shall also establish disclosure
requirements applicable to mortgagees making mortgage loans pursuant to
this section, to assure that mortgagors are informed of the
characteristics of such mortgages.
(e) 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.
(f) Number of dwelling units
The number of dwelling units included in properties covered by
mortgages insured pursuant to this section in any fiscal year may not
exceed 5,000.
(June 27, 1934, ch. 847, title II, Sec. 253, as added Pub. L. 98-181,
title IV, Sec. 445, Nov. 30, 1983, 97 Stat. 1226; amended Pub. L. 100-
242, title IV, Sec. 429(j), Feb. 5, 1988, 101 Stat. 1919.)
Amendments
1988--Subsec. (b). Pub. L. 100-242, Sec. 429(j)(1), substituted
``For purposes of this section, the term `net appreciated value' means
the amount by which the sales price of the property (less the
mortgagor's selling costs) exceeds the actual project cost after
completion, as approved by the Secretary'' for ``For purposes of this
section, the term `net appreciated value' means the amount by which the
sales price of the property (less the mortgagor's selling costs) exceeds
the value (or replacement cost, as appropriate) of the property at the
time the commitment to insure is issued (with adjustments for capital
improvements stipulated in the loan contract)''.
Subsec. (c). Pub. L. 100-242, Sec. 429(j)(2), (3), substituted ``in
accordance with section 1713 of this title'' for ``in accordance with
section 1710 of this title'' and ``The term `original principal face
amount of the mortgage' as used in section 1713 of this title shall not
include the mortgagee's share of net appreciated value'' for ``The term
`original principal obligation of the mortgage' as used in section
1710(a) of this title shall not include the mortgagee's share of net
appreciated value''.
Section Referred to in Other Sections
This section is referred to in section 1709 of this title.
