§ 1715z-2. — Special mortgage insurance assistance.
[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-2]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-2. Special mortgage insurance assistance
(a) Purpose
The purpose of this section is to help provide adequate housing for
families of low and moderate income, including those who, for reasons of
credit history, irregular income patterns caused by seasonal employment,
or other factors, are unable to meet the credit requirements of the
Secretary for the purchase of a single-family home financed by a
mortgage insured under section 1709, 1715k, 1715l, 1715y, or 1715z(j)(4)
of this title, but who, through the incentive of homeownership and
counseling assistance, appear to be able to achieve homeownership.
(b) Authorization to insure mortgages meeting requirements of section
The Secretary is authorized upon application by the mortgagee to
insure under this section not more than 26 percent of the total
principal obligation (including such initial service charges, and such
appraisal, inspection, and other fees as the Secretary shall approve) of
any mortgage meeting the requirements of this section.
(c) Eligibility for insurance
To be eligible for insurance under this section, a mortgage shall--
(1) meet the requirements of section 1709 (except subsection
(m)),\1\ 1715k(d)(3)(A), 1715l(d)(2), (h)(5), (i), 1715y(c), or
1715z(j)(4) of this title, except as such requirements are modified
by this section;
---------------------------------------------------------------------------
\1\ See References in Text note below.
---------------------------------------------------------------------------
(2) involve a principal obligation (including such initial
service charges, and such appraisal, inspection, and other fees, as
the Secretary shall approve) in an amount not to exceed $70,000;
(3) be executed by a mortgagor who the Secretary has determined,
after a full and complete study of the case, would not be an
acceptable credit risk for mortgage insurance purposes under
sections 1709, 1715k, 1715l, 1715y, or 1715z(j)(4) of this title,
because of his credit standing, debt obligations, total annual
income, or income characteristics, but who the Secretary is
satisfied would be a reasonably satisfactory credit risk, consistent
with the objectives stated in subsection (a) of this section, if he
were to receive budget, debt management, and related counseling,
prior to and during the 12 months immediately following the purchase
of the property, from a community development financial institution
under section 4702(5) of this title: Provided, That, in determining
whether the mortgagor is a reasonably satisfactory credit risk, the
Secretary shall review the credit history of the applicant giving
special consideration to those delinquent accounts which were
ultimately paid by the applicant and to extenuating factors which
may have caused credit accounts of the applicant to become
delinquent; and the Secretary shall also give special consideration
to income characteristics of applicants whose total income over the
two years prior to their applications has remained at levels of
eligibility (as required under paragraph (4) of this subsection),
but who, because of the character of this seasonal employment or for
other reasons, have not maintained continuous employment under one
employer during that time;
(4) require monthly payments which, in combination with local
real estate taxes on the property involved, do not exceed 36 per
centum of the applicant's income, based on his average monthly
income during the year prior to his application or the average
monthly income during the three years prior to his application,
whichever is higher; and
(5) require the mortgagor to be subject, if necessary, to a
default mitigation effort undertaken by an intermediary community
development financial institution under section 4702(5) of this
title, that is acting as a sponsor and pass-through of insurance
under section 1709 of this title and is approved by the Secretary;
(6) involve a total principal obligation (including such initial
service charges, and such appraisal, inspection, and other fees as
the Secretary shall approve) that is not more than 90 percent of the
value of the property for which the mortgage is provided; and
(7) involve a total principal obligation (including such initial
service charges, and such appraisal, inspection, and other fees as
the Secretary shall approve) in which the mortgagor has equity (as
defined by the Secretary) of not less than 10 percent and such
equity shall be subordinate to the interest of the Secretary in the
mortgaged property.
(d) Preferences in approving mortgage insurance applications and in
providing counseling services; eligible families
The Secretary shall give preference in approving mortgage insurance
applications and in providing counseling services under this section (1)
to families which are eligible for assistance payments under section
1715z of this title, (2) to families living in empowerment zones and
enterprise communities (as those terms are defined in section 1393(b) of
title 26 \2\ who are eligible for homeownership assistance, and (3) to
families living in public housing units, especially those families
required to leave public housing because their incomes have risen beyond
the maximum prescribed income limits, and families eligible for
residence in public housing who have been displaced from federally
assisted urban renewal areas.
---------------------------------------------------------------------------
\2\ So in original. There probably should be a closing parenthesis.
---------------------------------------------------------------------------
(e) Budget, debt management, and related counseling services
The Secretary is authorized to provide, or contract with community
development financial institutions under section 4702(5) of this title
to provide, such budget, debt management, and related counseling
services to mortgagors whose mortgages are insured under this section as
he determines to be necessary to meet the objectives of this section.
The Secretary may also provide such counseling to otherwise eligible
families who lack sufficient funds to supply a down payment to help them
to save an amount necessary for that purpose.
(f) Aggregate principal balance of mortgages insured
The aggregate principal balance of the portions of mortgages insured
under this section and outstanding at one time shall not exceed
$200,000,000.
(g) Premium fee
Mortgages insured under this section shall be subject to an
insurance premium fee of not more than 1.25 percent of the total
mortgage principal obligation (including such initial service charges,
and such appraisal, inspection, and other fees as the Secretary shall
approve).
(h) Assumption of loss
Before insuring a mortgage under this section, the Secretary shall
enter into such contracts or other agreements as may be necessary to
ensure that the mortgagee or other holder of the mortgage shall assume
not less than 10 percent and not more than 50 percent of any loss on the
insured mortgage, subject to any reasonable limit on the liability of
the mortgagee or holder of the mortgage that may be specified in the
event of unusual or catastrophic losses that may be incurred by any one
mortgagee or mortgage holder.
(i) Guarantees
No guarantees may be issued under section 1721(g) of this title for
the timely payment of interest or principal on securities backed, in
whole or in part, by mortgages insured under this section.
(j) Authorization of appropriations
There are authorized to be appropriated such sums as may be
necessary to carry out the provisions of subsection (e) of this section.
(June 27, 1934, ch. 847, title II, Sec. 237, as added Pub. L. 90-448,
title I, Sec. 102(a), Aug. 1, 1968, 82 Stat. 485; amended Pub. L. 91-
152, title I, Secs. 110, 113(j), Dec. 24, 1969, 83 Stat. 382, 385; Pub.
L. 105-276, title V, Sec. 599F(a), Oct. 21, 1998, 112 Stat. 2665.)
References in Text
Section 1709(m) of this title, referred to in subsec. (c)(1), was
repealed by Pub. L. 100-242, title IV, Sec. 406(c), Feb. 5, 1988, 101
Stat. 1902.
Amendments
1998--Subsec. (b). Pub. L. 105-276, Sec. 599F(a)(1), inserted ``not
more than 26 percent of the total principal obligation (including such
initial service charges, and such appraisal, inspection, and other fees
as the Secretary shall approve) of'' before ``any mortgage''.
Subsec. (c)(2). Pub. L. 105-276, Sec. 599F(a)(2), substituted
``$70,000;'' for ``$18,000: Provided, That the Secretary may increase
the amount to not exceed $21,000 in any geographical area where he finds
that cost levels so require: Provided further, That no mortgage meeting
the requirements of section 1709 (h) or (i) of this title shall be
eligible for insurance under this section if its principal obligation is
in excess of the maximum limits prescribed in such section;''.
Subsec. (c)(3). Pub. L. 105-276, Sec. 599F(a)(3)(A), inserted ``,
prior to and during the 12 months immediately following the purchase of
the property, from a community development financial institution under
section 4702(5) of this title'' after ``budget, debt management, and
related counseling''.
Subsec. (c)(4). Pub. L. 105-276, Sec. 599F(a)(4)(A), substituted
``36'' for ``25''.
Subsec. (c)(5) to (7). Pub. L. 105-276, Sec. 599F(a)(3)(B), (4)(B),
(5), added pars. (5) to (7).
Subsec. (d). Pub. L. 105-276, Sec. 599F(a)(6), substituted ``(2) to
families living in empowerment zones and enterprise communities (as
those terms are defined in section 1393(b) of title 26 who are eligible
for homeownership assistance, and (3)'' for ``and (2)''.
Subsec. (e). Pub. L. 105-276, Sec. 599F(a)(7), substituted
``community development financial institutions under section 4702(5) of
this title'' for ``public or private organizations''.
Subsec. (f). Pub. L. 105-276, Sec. 599F(a)(8), substituted ``the
portions of mortgages'' for ``all mortgages''.
Subsecs. (g) to (j). Pub. L. 105-276, Sec. 599F(a)(9), (10), added
subsecs. (g) to (i) and redesignated former subsec. (g) as (j).
1969--Subsec. (c)(2). Pub. L. 91-152, Sec. 113(j), substituted
``$21,000'' for ``$17,500'' and ``$18,000'' for ``$15,000''.
Subsec. (d). Pub. L. 91-152, Sec. 110, inserted provision requiring
the Secretary to give a preference in providing counseling services to
the specified families, inserted text designated as cl. (1), and
designated existing text as cl. (2).
Effective Date of 1998 Amendment
Pub. L. 105-276, title V, Sec. 599F(b), Oct. 21, 1998, 112 Stat.
2666, provided that: ``The amendments under by [sic] this section
[amending this section] are made on, and shall apply beginning upon, the
date of the enactment of this Act [Oct. 21, 1998].''
Section Referred to in Other Sections
This section is referred to in sections 1715q, 1715z, 1715z-3, 1735c
of this title.
