§ 1735b. — Expenditures to correct or reimburse for structural or other major defects in mortgaged homes.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1735b]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER V--MISCELLANEOUS
Sec. 1735b. Expenditures to correct or reimburse for structural
or other major defects in mortgaged homes
(a) Prior to beginning of construction
(1) The Secretary is authorized to make expenditures under this
subsection with respect to any property that--
(A) is a condominium unit (including common areas) or is
improved by a one-to-four family dwelling;
(B) was approved, before the beginning of construction, for
mortgage insurance under this chapter or for guaranty, insurance, or
direct loan under chapter 37 of title 38 or was less than a year old
at the time of insurance of the mortgage and was covered by a
consumer protection or warranty plan acceptable to the Secretary;
and
(C) the Secretary finds to have structural defects.
(2) Expenditures under this subsection may be made for (A)
correcting such defects, (B) paying the claims of the owner of the
property arising from such defects, or (C) acquiring title to the
property: Provided, That such authority of the Secretary shall exist
only (A) if the owner has requested assistance from the Secretary not
later than four years (or such shorter time as the Secretary may
prescribe) after insurance of the mortgage, and (B) if the property is
encumbered by a mortgage which is insured under this chapter after
September 2, 1964.
(b) Mortgages insured on or after August 1, 1968, but prior to January
1, 1973; requirements; reimbursement from seller; insurance fund
chargeable
The Secretary is authorized to make expenditures to correct, or to
reimburse the owner for the correction of, structural or other major
defects which so seriously affect use and livability as to create a
serious danger to the life or safety of inhabitants of any one, two,
three, or four family dwelling which is covered by a mortgage insured
under section 1715z of this title or which is located in an older,
declining urban area and is covered by a mortgage insured under section
1709 or 1715l of this title on or after August 1, 1968, but prior to
January 1, 1973, and which is more than one year old on the date of the
issuance of the insurance commitment, if (1) the owner requests
assistance from the Secretary not later than one year after the
insurance of the mortgage, or, in the case of a dwelling covered by a
mortgage insured under section 1709 or 1715l of this title the insurance
commitment for which was issued on or after August 1, 1968, but prior to
January 1, 1973, not more than four months after August 3, 1976, and (2)
the defect is one that existed on the date of the issuance of the
insurance commitment and is one that a proper inspection could
reasonably be expected to disclose. The Secretary may require from the
seller of any such dwelling an agreement to reimburse him for any
payments made pursuant to this subsection with respect to such dwelling.
Expenditures pursuant to this subsection shall be made from the
insurance fund chargeable for insurance benefits on the mortgage
covering the structure to which the expenditures relate. There are
hereby authorized to be appropriated such sums as may be necessary to
cover the costs of such expenditures not otherwise provided for.
(c) Regulations; finality of decision
The Secretary shall by regulations prescribe the terms and
conditions under which expenditures and payments may be made under the
provisions of this section, and his decisions regarding such
expenditures or payments, and the terms and conditions under which the
same are approved or disapproved, shall be final and conclusive and
shall not be subject to judicial review.
(d) Mortgages insured on or after January 1, 1973, but prior to August
1, 1976; requirements; reimbursement from seller; insurance fund
chargeable
The Secretary is authorized to make expenditures to correct or to
reimburse the owner for the correction of structural or other major
defects which so seriously affect use and liveability as to create a
serious danger to the life or safety of inhabitants of any one-, two-,
three-, or four-family dwelling which is more than one year old on the
date of issuance of the insurance commitment, is located in an older,
declining urban area, and is covered by a mortgage insured under section
1709 or 1715l of this title on or after January 1, 1973, but prior to
August 3, 1976, if (1) the owner requests assistance from the Secretary
not more than one year after August 3, 1976, and (2) the defect is one
that existed on the date of the issuance of the insurance commitment and
is one that a proper inspection could reasonably have been expected to
have disclosed. The Secretary may require from the seller of any such
dwelling an agreement to reimburse him for any payments made pursuant to
this subsection with respect to such dwelling. Expenditures pursuant to
this subsection shall be made from the insurance fund chargeable for
insurance benefits on the mortgage covering the structure to which the
expenditures relate. There are hereby authorized to be appropriated such
sums as may be necessary to cover the costs of such expenditures not
otherwise provided for.
(e) Report to Congress on effective program for protecting home buyers
The Secretary of Housing and Urban Development is authorized and
directed to conduct a full and complete investigation and study and
report to Congress, with recommendations, not later than March 1, 1977,
with respect to an effective program for protecting home buyers from
hidden or undisclosed defects seriously affecting the use and livability
of the home, which would be applicable to existing homes financed with
mortgages insured under this chapter. In the study and report the
Secretary shall particularly investigate the need for, cost and feasible
structure of, a national home inspection and warranty program, with
respect to such homes, to be operated by the Federal Government out of
fees assessed on the home buyer and amortized over a period of two
years. The Secretary's report shall also present an analysis of
alternative Federal programs to meet these needs, and the cost and means
of financing such programs. In the report the Secretary shall also
outline administrative steps which can be taken to provide disclosure to
purchasers of existing homes financed with mortgages insured under this
chapter of the actual condition of the home and the types of repairs or
replacements likely to be needed within a period of two years, such as
repairs or replacement of furnace, roof or major appliances, based on
age and useful life expectancy of such appurtenances.
(June 27, 1934, ch. 847, title V, Sec. 518, as added Pub. L. 88-560,
title I, Sec. 121, Sept. 2, 1964, 78 Stat. 783; amended Pub. L. 90-19,
Sec. 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 91-609, title I,
Sec. 104, Dec. 31 1970, 84 Stat. 1771; Pub. L. 93-383, title III,
Sec. 306, Aug. 22, 1974, 88 Stat. 678; Pub. L. 94-50, title III,
Sec. 302, July 2, 1975, 89 Stat. 256; Pub. L. 94-375, Sec. 9, Aug. 3,
1976, 90 Stat. 1072; Pub. L. 98-181, title IV, Sec. 427, Nov. 30, 1983,
97 Stat. 1218; Pub. L. 102-550, title V, Sec. 515, Oct. 28, 1992, 106
Stat. 3789.)
Amendments
1992--Subsec. (a). Pub. L. 102-550 substituted par. (1) and ``(2)
Expenditures under this subsection may be made for'' for ``The Secretary
is authorized, with respect to any property improved by a one- to four-
family dwelling that, before the beginning of construction, was approved
for mortgage insurance under this chapter or for guaranty, insurance, or
a direct loan under chapter 37 of title 38 and that the Secretary finds
to have structural defects, to make expenditures for'' and redesignated
former cls. (1) to (3) appearing before proviso as cls. (A) to (C),
respectively, of par. (2).
1983--Subsec. (a). Pub. L. 98-181 substituted ``that, before the
beginning of construction, was approved for mortgage insurance under
this chapter or for guaranty, insurance, or a direct loan under chapter
37 of title 38 and that the Secretary finds'' for ``approved for
mortgage insurance prior to the beginning of construction which he
finds''.
1976--Subsec. (b). Pub. L. 94-375, Sec. 9(a), substituted ``not more
than four months after August 3, 1976'' for ``not more than 19 months
after August 22, 1974'', and provision requiring expenditures be made
from the insurance fund chargeable for insurance benefits on the
mortgage covering the structure and appropriating sums for expenditures
not otherwise covered for provision requiring expenditures be made from
the Special Risk Insurance Fund.
Subsecs. (d), (e). Pub. L. 94-375, Sec. 9(b), added subsecs. (d) and
(e).
1975--Subsec. (b). Pub. L. 94-50 substituted ``one, two, three, or
four'' for ``one or two'', and ``not more than 19 months'' for ``not
more than one year''.
1974--Subsec. (b). Pub. L. 93-383 substituted provisions relating to
authorization of the Secretary to make expenditures to correct, or to
reimburse the owner for the correction of structural or other major
defects of covered one or two family dwellings, for provisions relating
to the authorization of the Secretary to make expenditures to correct,
or to compensate the owner for, structural or other defects of covered
single-family dwellings.
1970--Subsecs. (b), (c). Pub. L. 91-609 added subsec. (b) and
redesignated former subsec. (b) as (c).
1967--Subsecs. (a), (b). Pub. L. 90-19 substituted ``Secretary'' for
``Commissioner'' wherever appearing.
