§ 1735g. — Mortgage relief for homeowners who are unemployed as result of closing of Federal installation.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1735g]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER V--MISCELLANEOUS
Sec. 1735g. Mortgage relief for homeowners who are unemployed as
result of closing of Federal installation
(a) Definitions
For the purposes of this section--
(1) The term ``mortgage'' means a mortgage which (A) is insured
under the National Housing Act [12 U.S.C. 1701 et seq.], or (B)
secures a home loan guaranteed or insured under the Servicemen's
Readjustment Act of 1944 or chapter 37 of title 38.
(2) The term ``Federal mortgage agency'' means--
(A) The Secretary of Housing and Urban Development when used
in connection with mortgages insured under the National Housing
Act, and
(B) the Secretary of Veterans Affairs when used in
connection with mortgages securing home loans guaranteed or
insured under the Servicemen's Readjustment Act of 1944 or
chapter 37 of title 38.
(3) The term ``distressed mortgagor'' means an individual who--
(A) was employed by the Federal Government at, or was
assigned as a serviceman to, a military base or other Federal
installation and whose employment or service at such base or
installation was terminated subsequent to November 1, 1964, as
the result of the closing (in whole or in part) of such base or
installation; and
(B) is the owner-occupant of a dwelling situated at or near
such base or installation and upon which there is a mortgage
securing a loan which is in default because of the inability of
such individual to make payments due under such mortgage.
(b) Application for, issuance and expiration of certificate of
moratorium
(1) Any distressed mortgagor, for the purpose of avoiding
foreclosure of his mortgage, may apply to the appropriate Federal
mortgage agency for a determination that suspension of his obligation to
make payments due under such mortgage during a temporary period is
necessary in order to avoid such foreclosure.
(2) Upon receipt of an application made under this subsection by a
distressed mortgagor, the Federal mortgage agency shall issue to such
mortgagor a certificate of moratorium if it determines, after
consultation with the interested mortgagee, that such action is
necessary to avoid foreclosure.
(3) Prior to the issuance to any distressed mortgagor of a
certificate of moratorium under paragraph (2), the Federal mortgage
agency, the mortgagor, and the mortgagee shall enter into a binding
agreement under which--
(A) the mortgagor will be required to make payments to such
agency, after the expiration of such certificate, in an aggregate
amount equal to the amount paid by such agency on behalf of such
mortgagor as provided in subsection (c) of this section, together
with interest thereon at a rate not to exceed the rate provided in
the mortgage; the manner and time in which such payments shall be
made to be determined by the Federal mortgage agency having due
regard for the purposes sought to be achieved by this section; and
(B) the Federal mortgage agency will be subrogated to the rights
of the mortgagee to the extent of payments made pursuant to such
certificate, which rights, however, shall be subject to the prior
right of the mortgagee to receive the full amount payable under the
mortgage.
(4) Any certificate of moratorium issued under this subsection shall
expire on whichever of the following dates is the earliest--
(A) two years from the date on which such certificate was
issued;
(B) thirty days after the date on which the mortgagor gives
notice in writing to the Federal mortgage agency that he is able to
resume his obligation to make payments due under his mortgage; or
(C) thirty days after the date on which the Federal mortgage
agency determines that the mortgagor to whom such certificate was
issued has ceased to be a distressed mortgagor as defined in
subsection (a)(3) of this section.
(c) Notice to mortgagee of assumption of mortgagor's obligation by
agency; amount of payments; suspension of payments by mortgagor;
prohibition against further action to enforce or collect
payments; liability of mortgagor upon expiration of certificate;
notice of expiration of certificate
(1) Whenever a Federal mortgage agency issues a certificate of
moratorium to any distressed mortgagor with respect to any mortgage, it
shall transmit to the mortgagee a copy of such certificate, together
with a notice stating that, while such certificate is in effect, such
agency will assume the obligation of such mortgagor to make payments due
under the mortgage.
(2) Payments made by any Federal mortgage agency pursuant to a
certificate of moratorium issued under this section with respect to the
mortgage of any distressed mortgagor may include, in addition to the
payments referred to in paragraph (1), an amount equal to the unpaid
payments under such mortgage prior to the issuance of such certificate,
plus a reasonable allowance for foreclosure costs actually paid by the
mortgagee if a foreclosure action was dismissed as a result of the
issuance of a moratorium certificate. Payments by the Federal mortgage
agency may also include payments of taxes and insurance premiums on the
mortgaged property as deemed necessary when these items are not provided
for through payments to a tax and insurance account held by the
interested mortgagee.
(3) While any certificate of moratorium issued under this section is
in effect with respect to the mortgage of any distressed mortgagor, no
further payments due under the mortgage shall be required of such
mortgagor, and no action (legal or otherwise) shall be taken or
maintained by the mortgagee to enforce or collect such payments. Upon
the expiration of such certificate, the mortgagor shall again be liable
for the payment of all amounts due under the mortgage in accordance with
its terms.
(4) Each Federal mortgage agency shall give prompt notice in writing
to the interested mortgagor and mortgagee of the expiration of any
certificate of moratorium issued by it under this section.
(d) Regulations
The Federal mortgage agencies are authorized to issue such
individual and joint regulations as may be necessary to carry out this
section and to insure the uniform administration thereof.
(e) Fund for extending financial assistance to distressed mortgagors
There shall be in the Treasury (1) a fund which shall be available
to the Secretary of Housing and Urban Development for the purpose of
extending financial assistance in behalf of distressed mortgagors as
provided in subsection (c) of this section, and for paying
administrative expenses incurred in connection with such assistance, and
(2) a fund which shall be available to the Secretary of Veterans Affairs
for the same purpose, except administrative expenses. The capital of
each such fund shall consist of such sums as may, from time to time, be
appropriated thereto, and any sums so appropriated shall remain
available until expended. Receipts arising from the programs of
assistance under subsection (c) of this section shall be credited to the
funds from which such assistance was extended. Moneys in either of such
funds not needed for current operations, as determined by the Secretary
of Housing and Urban Development, or the Secretary of Veterans Affairs,
as the case may be, shall be invested in bonds or other obligations of
the United States, or paid into the Treasury as miscellaneous receipts.
(Pub. L. 89-117, title I, Sec. 107(a)-(e), Aug. 10, 1965, 79 Stat. 458,
459; Pub. L. 89-754, title X, Sec. 1012, Nov. 3, 1966, 80 Stat. 1288;
Pub. L. 102-54, Sec. 13(d)(3), June 13, 1991, 105 Stat. 275.)
References in Text
The National Housing Act, referred to in subsec. (a), is act June
27, 1934, ch. 847, 48 Stat. 1246, as amended, which is classified
principally to this chapter (Sec. 1701 et seq.). For complete
classification of this Act to the Code, see section 1701 of this title
and Tables.
The Servicemen's Readjustment Act of 1944, referred to in subsec.
(a), is act June 22, 1944, ch. 268, 58 Stat. 284, as amended, which was
classified generally to chapter 11C (Sec. 693 to 697g) of former Title
38, Pensions, Bonuses, and Veterans' Relief, and was repealed by section
14(87) of Pub. L. 85-857, Sept. 2, 1958, 72 Stat. 1273, the first
section of which enacted Title 38, Veterans' Benefits. For distribution
of sections 693 to 697g of former Title 38 to Title 38, Veterans'
Benefits, see Table preceding section 101 of Title 38, Veterans'
Benefits.
Codification
Section was enacted as part of the Housing and Urban Development Act
of 1965, and not as part of the National Housing Act which comprises
this chapter.
Amendments
1991--Subsecs. (a)(2)(B), (e). Pub. L. 102-54 substituted
``Secretary of Veterans Affairs'' for ``Administrator of Veterans'
Affairs'' wherever appearing.
1966--Subsec. (a)(2)(A). Pub. L. 89-754 substituted ``Secretary of
Housing and Urban Development'' for ``Federal Housing Commissioner''.
Subsec. (a)(3). Pub. L. 89-754 redefined as distressed mortgagor,
describing in subpar. (A) such a person as an individual whose
employment or military service at a military base or other Federal
installation was terminated subsequent to Nov. 1, 1964, as the result of
closing of such base or installation, formerly defined as an individual
who was unemployed, although willing to work, as the result of the
closing of a Federal installation, and providing in subpar. (B) for
dwelling situated at or near the base or installation and substituting
``payments due under such mortgage'' for ``payments of principal and/or
interest under such mortgage''.
Subsec. (b)(1). Pub. L. 89-754 substituted ``payments due under such
mortgage'' for ``payments of principal and/or interest under such
mortgage''.
Subsec. (b)(2). Pub. L. 89-754 struck out subpar. (A) providing for
determination that mortgagor is not in default with respect to any
condition or covenant of the mortgage other than requiring the payment
of installments of principal and/or interest under the mortgage and
incorporated without subpar. designation provision for determination
that such action is necessary to avoid foreclosure, formerly providing
in subpar. (B) that such action was the only available means of avoiding
foreclosure of such mortgage.
Subsec. (b)(3). Pub. L. 89-754 substituted in introductory text
``the Federal mortgage agency, the mortgagor, and the mortgagee shall
enter into a binding agreement'' for ``the Federal mortgage agency shall
require such mortgagor to enter into a binding agreement'', designated
existing provisions as subpar. (A), provided for payment of interest at
rate not to exceed the rate provided in the mortgage, and added subpar.
(B).
Subsec. (b)(4). Pub. L. 89-754 increased the period from one to two
years in subpar. (A), substituted subpar. (B) provision for expiration
date as thirty days after date on which mortgagor gives notice in
writing to Federal mortgage agency of ability to resume obligation to
make payments due under his mortgage for former provision as the date
thirty days after date on which mortgagor to whom certificate was issued
ceased to be a distressed mortgagor, now incorporated in subpar. (C),
redesignated former subpar. (B) as (C), providing for a determination by
the Federal mortgage agency, and struck out former subpar. (C) provision
for date on which mortgagor becomes in default with respect to any
condition or covenant in his mortgage other than that requiring the
payment by him of installments of principal and/or interest under the
mortgage.
Subsec. (c)(1). Pub. L. 89-754 substituted ``payments due under the
mortgage'' for ``payments of principal, and, if so specified in the
certificate, of interest, under the mortgage''.
Subsec. (c)(2). Pub. L. 89-754 substituted ``may include'' for
``shall include'' and ``unpaid payments under such mortgage'' for
``unpaid principal and interest charges which had accrued and subsequent
to the date on which such mortgagor became a distressed mortgagor as
defined in subsection (a) of this section'', and authorized payments of
reasonable allowance for foreclosure costs actually paid by the
mortgagee if a foreclosure action was dismissed as result of issuance of
moratorium certificate and taxes and insurance premiums on mortgaged
property as deemed necessary when not provided for through payments to a
tax and insurance account held by the interested mortgagee.
Subsec. (c)(3). Pub. L. 89-754 substituted ``payments due under the
mortgage'' for ``payments of principal, and, if so specified in the
certificate, of interest, under the mortgage''.
Subsec. (d). Pub. L. 89-754 reenacted subsec. (d) without change.
Subsec. (e). Pub. L. 89-754 substituted ``Secretary of Housing and
Urban Development'' for ``Federal Housing Commissioner'' in two places
and made fund available for payment of administrative expenses incurred
in connection with assistance to distressed mortgagors and unavailable
for payment of administrative expenses of the Administrator of Veterans'
Affairs.
