§ 1715z-19. — Equity skimming penalty.
[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-19]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-19. Equity skimming penalty
(a) In general
Whoever, as an owner, agent, or manager, or who is otherwise in
custody, control, or possession of a multifamily project or a 1- to 4-
family residence that is security for a mortgage note that is described
in subsection (b) of this section, willfully uses or authorizes the use
of any part of the rents, assets, proceeds, income, or other funds
derived from property covered by that mortgage note for any purpose
other than to meet reasonable and necessary expenses that include
expenses approved by the Secretary if such approval is required, in a
period during which the mortgage note is in default or the project is in
a nonsurplus cash position, as defined by the regulatory agreement
covering the property, or the mortgagor has failed to comply with the
provisions of such other form of regulatory control imposed by the
Secretary, shall be fined not more than $500,000, imprisoned not more
than 5 years, or both.
(b) Mortgage notes described
For purposes of subsection (a) of this section, a mortgage note is
described in this subsection if it--
(1) is insured, acquired, or held by the Secretary pursuant to
this chapter;
(2) is made pursuant to section 1701q of this title (including
property still subject to section 1701q program requirements that
existed before November 28, 1990); or
(3) is insured or held pursuant to section 1715z-22 of this
title, but is not reinsured under section 1715z-22 of this title.
(June 27, 1934, ch. 847, title II, Sec. 254, as added Pub. L. 100-242,
title IV, Sec. 416(b), Feb. 5, 1988, 101 Stat. 1908; amended Pub. L.
105-65, title V, Sec. 552, Oct. 27, 1997, 111 Stat. 1412.)
Amendments
1997--Pub. L. 105-65 amended section generally. Prior to amendment,
section read as follows: ``Whoever, as an owner, agent, or manager, or
who is otherwise in custody, control, or possession of property that is
security for a mortgage note that is insured, acquired, or held by the
Secretary pursuant to section 1709, 1713, 1715e, 1715k, 1715l(d)(3),
1715l(d)(4), 1715n(f), 1715v, 1715w, 1715y, 1715z-1, 1715z-3(c), 1715z-
6, 1715z-7, 1715z-9, 1743, or 1748h-2 of this title, or subchapter IX-B
of this chapter, or is made pursuant to section 1701q of this title,
willfully uses or authorizes the use of any part of the rents, assets,
proceeds, income or other funds derived from property covered by such
mortgage note during a period when the mortgage note is in default or
the project is in a nonsurplus cash position as defined by the
regulatory agreement covering such property, for any purpose other than
to meet actual or necessary expenses that include expenses approved by
the Secretary if such approval is required under the terms of the
regulatory agreement, shall be fined not more than $250,000 or
imprisoned not more than 5 years, or both.''
