§ 1715z-8. — Mortgage assistance payments for middleincome families.
[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-8]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-8. Mortgage assistance payments for middle-income
families
(a) Determination by Secretary of necessity; interest subsidy payments;
effective date
Whenever he determines such action to be necessary in furtherance of
the purposes set forth in section 501 of the Emergency Home Finance Act
of 1970, the Secretary is authorized to make, and to contract to make,
periodic assistance payments on behalf of families of middle income. The
assistance shall be accomplished through interest subsidy payments to
the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation (hereinafter referred to as ``the investor'') with
respect to mortgages meeting the special requirements specified in this
section and made after July 24, 1970.
(b) Qualifications of mortgagor for assistance payments
To qualify for assistance payments a middle-income family shall be a
mortgagor under a mortgage which is (1) insured under subsection (j) of
this section, (2) guaranteed under chapter 37 of title 38, or (3) a
conventional mortgage meeting the requirements of subsection (j)(3) of
this section. In addition to the foregoing requirement, the Secretary
may require that the mortgagor have an income, at the time of
acquisition of the property, of not more than the median income for the
area in which the property is located, as determined by the Secretary,
with appropriate adjustments for smaller and larger families.
(c) Termination of interest subsidy payments
The interest subsidy payments authorized by this section shall cease
when (1) the mortgagor no longer occupies the property which secures the
mortgage, (2) the mortgages are no longer held by the investor, or (3)
the rate of interest paid by the mortgagor reaches the rate of interest
specified on the mortgage.
(d) Monthly mortgage payments as determining eligibility for interest
subsidy payments; mortgage assistance payments for middle-income
cooperative members; interest subsidy payments; applicability of
provisions to cooperative mortgagors
(1) Interest subsidy payments shall be on mortgages on which the
mortgagor makes monthly payments towards principal and interest equal to
an amount which would be required if the mortgage bore an effective
interest rate of 7 per centum per annum including any discounts or
charges in the nature of points or otherwise (but not including
premiums, if any, for mortgage insurance) or such higher rate (not to
exceed the rate specified in the mortgage), which the mortgagor could
pay by applying at least 20 per centum of his income towards
homeownership expenses. As used in this subsection, the term ``monthly
homeownership expense'' includes the monthly payment for principal,
interest, mortgage insurance premium, insurance, and taxes due under the
mortgage.
(2) In addition to the mortgages eligible for assistance under
paragraph (1) of this subsection, the Secretary is authorized to make
periodic assistance payments on behalf of cooperative members of middle
income. Such assistance payments shall be accomplished through interest
subsidy payments to the investor with respect to mortgages insured
(subsequent to July 24, 1970) under section 1715e of this title which
are executed by cooperatives, the membership in which is limited to
middle-income families. For purposes of this paragraph--
(A) the term ``mortgagor'', when used in subsection (b) of this
section in the case of a mortgage covering a cooperative housing
project, means a member of the cooperative;
(B) the term ``acquisition of the property'', when used in
subsection (b) of this section, means the family's application for a
dwelling unit; and
(C) in the case of a cooperative mortgagor, subsection (c) of
this section shall not apply and the interest subsidy payments shall
cease when the mortgage is no longer held by the investor or the
cooperative fails to limit membership to families whose incomes at
the time of their application for a dwelling unit meets such
requirements as are laid down by the Secretary pursuant to
subsection (b) of this section.
(e) Amount of interest subsidy payments
The interest subsidy payments shall be in an amount equal to the
difference, as determined by the Secretary, between the total amount of
interest per calendar quarter received by the investor on mortgages
assisted under this section and purchased by it and the total amount of
interest which the investor would have received if the yield on such
mortgages was equal to the sum of (1) the average costs (expressed as an
annual percentage rate) to it of all borrowed funds outstanding in the
immediately preceding calendar quarter, and (2) such per centum per
annum as will provide for administrative and other expenses of the
investor and a reasonable economic return, as determined by the
Secretary to be necessary and appropriate taking into account the
purpose of this section to provide additional mortgage credit at
reasonable rates of interest to middle-income families.
(f) Adoption of procedures for recertifications of mortgagor's income
Procedures shall be adopted by the Secretary for recertifications of
the mortgagor's income at intervals of two years (or at shorter
intervals where the Secretary deems it desirable) for the purpose of
adjusting the amount of the mortgagor's payments pursuant to subsection
(d) of this section.
(g) Regulations to assure that sales price or other consideration paid
is not increased above appraised value
The Secretary shall prescribe such regulations as he deems necessary
to assure that the sales price of, or other consideration paid in
connection with, the purchase by a homeowner of the property with
respect to which assistance payments are to be made is not increased
above the appraised value on which the maximum mortgage which the
Secretary will insure is computed.
(h) Authorization of appropriations; aggregate amount of assistance
payment contracts; termination date
(1) There are authorized to be appropriated such sums as may be
necessary to enable the Secretary to make interest subsidy payments
under contracts entered into under this section. The aggregate amount of
contracts to make such payments shall not exceed amounts approved in
appropriation Acts, and payments pursuant to such contracts shall not
exceed $105,000,000 during the first year of such contracts prior to
July 1, 1971, which amount shall be increased by an additional
$105,000,000 during the first year of an additional number of such
contracts on July 1 of each of the years 1971 and 1972.
(2) No interest subsidy payments under this section shall be made
after June 30, 1973, except pursuant to contracts entered into on or
before such date.
(i) Determination of family income; exclusion of income of minors
In determining the income of any family for the purposes of this
section, income from all sources of each member of the family in the
household shall be included, except that the Secretary shall exclude
income earned by any minor person.
(j) Insurance of mortgages executed by mortgagors meeting eligibility
requirements for assistance payments; issuance of commitment;
eligibility requirements for insurance
(1) The Secretary is authorized, upon application by the mortgagee,
to insure a mortgage executed by a mortgagor who meets the eligibility
requirements for assistance payments prescribed by the Secretary under
subsection (b) of this section. Commitments for the insurance of such
mortgages may be issued by the Secretary prior to the date of their
execution or disbursement thereon, upon such terms and conditions as the
Secretary may prescribe.
(2) To be eligible for insurance under this subsection, a mortgage
shall meet the requirements of section 1715l(d)(2) or 1715y(c) of this
title, except as such requirements are modified by this subsection:
Provided, however, That in the discretion of the Secretary 25 per centum
of the authority conferred by this section and subject to all the terms
thereof may be used for mortgages on existing housing.
(3) A mortgage to be insured under this section shall--
(i) involve a single-family dwelling which has been approved by
the Secretary prior to the beginning of construction, or a one-
family unit in a condominium project (together with an undivided
interest in the common areas and facilities serving the project)
which is released from a multifamily project, the construction of
which has been completed within two years prior to the filing of the
application for assistance payments with respect to such family unit
and the unit shall have had no previous occupant other than the
mortgagor;
(ii) involve a single-family dwelling whose appraised value, as
determined by the Secretary, is not in excess of $20,000 (which
amount may be increased by not more than 50 per centum in any
geographical area where the Secretary authorizes an increase on the
basis of a finding that the cost level so requires); and
(iii) be executed by a mortgagor who shall have paid in cash or
its equivalent on account of the property (A) 3 per centum of the
first $15,000 of the appraised value of the property, (B) 10 per
centum of such value in excess of $15,000 but not in excess of
$25,000, and (C) 20 per centum of such value in excess of $25,000.
(June 27, 1934, ch. 847, title II, Sec. 243, as added Pub. L. 91-351,
title V, Sec. 502, July 24, 1970, 84 Stat. 458; amended Pub. L. 98-479,
title II, Sec. 204(a)(14), (15), Oct. 17, 1984, 98 Stat. 2232.)
References in Text
Section 501 of the Emergency Home Finance Act of 1970, referred to
in subsec. (a), is section 501 of Pub. L. 91-351, which is set out as a
note below.
Amendments
1984--Subsec. (d)(2). Pub. L. 98-479, Sec. 204(a)(14), redesignated
subpars. (1), (2), and (3) as subpars. (A), (B), and (C), respectively.
Subsec. (j)(3)(ii). Pub. L. 98-479, Sec. 204(a)(15), substituted ``;
and'' for period at end.
Congressional Findings and Declaration of Purpose
Section 501 of Pub. L. 91-351 provided that: ``The Congress finds
that--
``(1) periodic episodes of monetary stringency and high interest
rates make it extremely difficult for families of middle income to
obtain mortgage credit at rates which they can afford to pay;
``(2) periods of monetary stringency and high interest rates are
directly related to the Government's monetary and fiscal policies;
``(3) a disproportionate share of the burden of sustaining these
anti-inflationary policies of the Government falls on families of
middle income who are buyers or prospective buyers of homes; and
``(4) the Government has a responsibility to lessen the
disproportionate burden which such families bear as a result of such
policies.
It is the purpose of this title [enacting this section, and amending
sections 1715z-3 and 1719 of this title] to provide, during periods of
high mortgage interest rates, a source of mortgage credit for such
families which is within their financial means.''
Section Referred to in Other Sections
This section is referred to in sections 1715z-3, 1719 of this title.
