§ 1739. — Mortgage insurance benefits.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1739]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER VI--WAR HOUSING INSURANCE
Sec. 1739. Mortgage insurance benefits
(a) Conveyance and assignment by mortgagee after foreclosure; debentures
and certificates of claim; cost of foreclosure
In any case in which the mortgagee under a mortgage insured under
section 1738 of this title shall have foreclosed and taken possession of
the mortgaged property, in accordance with regulations of, and within a
period to be determined by, the Secretary, or shall, with the consent of
the Secretary, have otherwise acquired such property from the mortgagor
after default, the mortgagee shall be entitled to receive the benefit of
the insurance as hereinafter provided, upon (1) the prompt conveyance to
the Secretary of title to the property which meets the requirements of
rules and regulations of the Secretary in force at the time the mortgage
was insured, and which is evidenced in the manner prescribed by such
rules and regulations; and (2) the assignment to him of all claims of
the mortgagee against the mortgagor or others, arising out of the
mortgage transaction or foreclosure proceedings, except such claims as
may have been released with the consent of the Secretary. Upon such
conveyance and assignment the obligation of the mortgagee to pay the
premium charges for insurance shall cease and the Secretary shall,
subject to the cash adjustment hereinafter provided, issue to the
mortgagee debentures having a total face value equal to the value of the
mortgage and a certificate of claim, as hereinafter provided. For the
purposes of this subsection, the value of the mortgage shall be
determined, in accordance with rules and regulations prescribed by the
Secretary, by adding to the amount of the original principal obligation
of the mortgage which was unpaid on the date of the institution of
foreclosure proceedings, or on the date of the acquisition of the
property after default other than by foreclosure, the amount of all
payments which have been made by the mortgagee for taxes, ground rents,
and water rates, which are liens prior to the mortgage, special
assessments which are noted on the application for insurance or which
become liens after the insurance of the mortgage, insurance of the
mortgaged property, and any mortgage insurance premiums and by deducting
from such total amount any amount received on account of the mortgage
after either of such dates, and any amount received as rent or other
income from the property, less reasonable expenses incurred in handling
the property, after either of such dates: Provided, That with respect to
mortgages which are foreclosed before there shall have been paid on
account of the principal obligation of the mortgage a sum equal to 10
per centum of the appraised value of the property as of the date the
mortgage was accepted for insurance, there may be included in the
debentures issued by the Secretary, on account of the cost of
foreclosure (or of acquiring the property by other means) actually paid
by the mortgagee and approved by the Secretary an amount--
(1) not in excess of 2 per centum of the unpaid principal of the
mortgage as of the date of the institution of foreclosure
proceedings and not in excess of $75; or
(2) not in excess of two-thirds of such cost, whichever is the
greater: Provided further, That with respect to any debentures
issued on or after September 2, 1964, the Secretary may, with the
consent of the mortgagee (in lieu of issuing a certificate of claim
as provided in subsection (e) of this section), include in
debentures, in addition to amounts otherwise allowed for such costs,
an amount not to exceed one-third of the total foreclosure,
acquisition, and conveyance costs actually paid by the mortgagee and
approved by the Secretary, but in no event may the total allowance
for such costs exceed the amount actually paid by the mortgagee: And
provided further, That with respect to mortgages to which the
provisions of sections 532 and 536 of the Appendix to title 50 apply
and which are insured under section 1738 of this title and subject
to such regulations and conditions as the Secretary may prescribe,
there shall be included in the debentures an amount which the
Secretary finds to be sufficient to compensate the mortgagee for any
loss which it may have sustained on account of interest on
debentures and the payment of insurance premiums by reason of its
having postponed the institution of foreclosure proceedings or the
acquisition of the property by other means during any part or all of
the period of such military service and three months thereafter.
(b) Consent to release of mortgagee or property
The Secretary may at any time, under such terms and conditions as he
may prescribe, consent to the release of the mortgagor from his
liability under the mortgage or the credit instrument secured thereby,
or consent to the release of parts of the mortgaged property from the
lien of the mortgage: Provided, That the mortgagor shall not be released
from such liability in any case until the Secretary is satisfied that
the mortgaged property has been sold to a purchaser satisfactory to the
Secretary, and that such purchaser has paid on account of the purchase
price, in cash or its equivalent, at least 10 per centum of the
Secretary's estimate of the value as of the date the mortgage is
accepted for insurance.
(c) Debentures; form and denomination
Debentures issued under this subchapter shall be in such form and
denominations in multiples of $50, shall be subject to such terms and
conditions, and shall include such provisions for redemption, if any, as
may be prescribed by the Secretary with the approval of the Secretary of
the Treasury, and may be in coupon or registered form. Any difference
between the value of the mortgage determined as herein provided and the
aggregate face value of the debentures issued, not to exceed $350, shall
be adjusted by the payment of cash by the Secretary to the mortgagee
from the General Insurance Fund.
(d) Debentures; execution; negotiability; terms; tax exemptions
The debenture issued under this section to any mortgagee shall be
executed in the name of the General Insurance Fund as obligor, shall be
signed by the Secretary by either his written or engraved signature, and
shall be negotiable. All such debentures shall be dated as of the date
foreclosure proceedings were instituted, or the property was otherwise
acquired by the mortgagee after default, except that debentures issued
pursuant to claims for insurance filed on or after September 2, 1964,
shall be dated as of the date of default or as of such later date as the
Secretary, in his discretion, may establish by regulation. The
debentures shall bear interest from such date at a rate determined by
the Secretary, with the approval of the Secretary of the Treasury, at
the time the mortgage was accepted for insurance, but not to exceed 3
per centum per annum, payable semiannually on the 1st day of January and
the 1st day of July of each year. Such debentures as are issued in
exchange for property covered by mortgages accepted for insurance under
this section on or after May 26, 1942, shall mature ten years after the
date thereof. Such debentures as are issued in exchange for property
covered by mortgages accepted for insurance under this section prior to
May 26, 1942, shall mature three years after the 1st day of July
following the maturity date of the mortgage on the property in exchange
for which the debentures were issued: Provided, That any mortgagee
entitled to receive such debentures may elect to receive in lieu thereof
debentures which shall mature ten years after the date thereof. Such
debentures shall be exempt, both as to principal and interest, from all
taxation (except surtaxes, estate, inheritance, and gift taxes) now or
hereafter imposed by any Territory, dependency, or possession of the
United States, or by the District of Columbia, or by any State, county,
municipality, or local taxing authority, and shall be paid out of the
General Insurance Fund, which shall be primarily liable therefor, and
they shall be fully and unconditionally guaranteed as to principal and
interest by the United States, and such guaranty shall be expressed on
the face of the debentures. In the event that the General Insurance Fund
fails to pay upon demand, when due, the principal of or interest on any
debentures issued under this subchapter, the Secretary of the Treasury
shall pay to the holders the amount thereof which is authorized to be
appropriated, out of any money in the Treasury not otherwise
appropriated, and thereupon to the extent of the amount so paid the
Secretary of the Treasury shall succeed to all the rights of the holders
of such debentures.
(e) Certificate of claim
The certificate of claim issued by the Secretary to any mortgagee
shall be for an amount which the Secretary determines to be sufficient,
when added to the face value of the debentures issued and the cash
adjustment paid to the mortgagee, to equal the amount which the
mortgagee would have received if, at the time of the conveyance to the
Secretary of the property covered by the mortgage, the mortgagor had
redeemed the property and paid in full all obligations under the
mortgage and a reasonable amount for necessary expenses incurred by the
mortgagee in connection with the foreclosure proceedings, or the
acquisition of the mortgaged property otherwise, and the conveyance
thereof to the Secretary. Each such certificate of claim shall provide
that there shall accrue to the holder of such certificate with respect
to the face amount of such certificate, an increment at the rate of 3
per centum per annum which shall not be compounded. The amount to which
the holder of any such certificate shall be entitled shall be determined
as provided in subsection (f) of this section.
(f) Division of excess proceeds
(1) If, after deducting (in such manner and amount as the Secretary
shall determine to be equitable and in accordance with sound accounting
practice) the expenses incurred by the Secretary, the net amount
realized from any property conveyed to the Secretary under this section
and the claims assigned therewith exceed the face value of the
debentures issued and the cash paid in exchange for such property plus
all interest paid on such debentures, such excess shall be divided as
follows:
(i) If such excess is greater than the total amount payable
under the certificate of claim issued in connection with such
property, the Secretary shall pay to the holder of such certificate
the full amount so payable, and any excess remaining thereafter
shall be paid to the mortgagor of such property: Provided, That on
and after September 2, 1964, any excess remaining after payment to
the holder of the full amount of the certificate of claim shall be
retained by the Secretary and credited to the General Insurance
Fund; and
(ii) If such excess is equal to or less than the total amount
payable under such certificate of claim, the Secretary shall pay to
the holder of such certificate the full amount of such excess.
(2) Notwithstanding any other provisions of this section, the
Secretary is authorized, with the consent of the mortgagee or mortgagor,
as the case may be, to effect the settlement of certificates of claim
and refunds at any time after the sale or transfer of title to the
property conveyed to the Secretary under this section and without
awaiting the final liquidation of such property for the purpose of
determining the net amount to be realized therefrom: Provided, That the
settlement authority created by the Housing Amendments of 1955 shall be
terminated with respect to any certificate of claim outstanding as of
September 2, 1964.
(3) With the consent of the holder thereof, the Secretary is
authorized to settle, without awaiting the final liquidation of the
Secretary's interest in the property, any certificate of claim issued
pursuant to subsection (e) of this section, with respect to which a
settlement had not been effected prior to September 2, 1964, by making
payment in cash to the holder thereof of such amount, not exceeding the
face amount of the certificate of claim, together with the accrued
interest increment thereon, as the Secretary may consider appropriate:
Provided, That in any case where the certificate of claim is settled in
accordance with the provisions of this paragraph, any amounts realized
after September 2, 1964, in the liquidation of the Secretary's interest
in the property, shall be retained by the Secretary and credited to the
applicable insurance fund.
(g) Handling and disposal of property; settlement of claims
Notwithstanding any other provision of law relating to the
acquisition, handling, or disposal of real property by the United
States, the Secretary shall have power to deal with, complete, rent,
renovate, modernize, insure, make contracts or establish suitable
agencies for the management of, or sell for cash or credit, in his
discretion, any properties conveyed to him in exchange for debentures
and certificates of claim as provided in this subchapter; and
notwithstanding any other provision of law, the Secretary shall also
have power to pursue to final collection, by way of compromise or
otherwise, all claims against mortgagors assigned by mortgagees to the
Secretary as provided in this subchapter, except that no suit or action
shall be commenced by the Secretary against any such mortgagor on
account of any claim so assigned with respect to mortgages insured under
section 1738 of this title unless such suit or action is commenced
within six months after the assignment of such claim to the Secretary,
or within six months after the last payment was made to the Secretary
with respect to the claim so assigned, whichever is later: Provided,
That section 5 of title 41 shall not be construed to apply to any
contract for hazard insurance, or to any purchase or contract for
services or supplies on account of such property if the amount thereof
does not exceed $1,000. The power to convey and to execute in the name
of the Secretary deeds of conveyances, deeds of release, assignments,
and satisfactions of mortgages, and any other written instrument
relating to real property or any interest therein heretofore or
hereafter acquired by the Secretary pursuant to the provisions of this
chapter, may be exercised by an officer appointed by him, without the
execution of any express delegation of power or power of attorney:
Provided, That nothing in this subsection shall be construed to prevent
the Secretary from delegating such power by order or by power of
attorney in his discretion, to any officer, agent, or employee he may
appoint.
(h) Mortgagor's or mortgagee's interest in property or claim conveyed
No mortgagee or mortgagor shall have and no certificate of claim
shall be construed to give to any mortgagee or mortgagor, any right or
interest in any property conveyed to the Secretary or in any claim
assigned to him; nor shall the Secretary owe any duty to any mortgagee
or mortgagor with respect to the handling or disposal of any such
property or the collection of any such claim.
(June 27, 1934, ch. 847, title VI, Sec. 604, as added Mar. 28, 1941, ch.
31, Sec. 1, 55 Stat. 58; amended May 26, 1942, ch. 319, Secs. 5-8,
14(b), 56 Stat. 302, 305; Oct. 14, 1943, ch. 258, Sec. 2, 57 Stat. 570;
May 22, 1946, ch. 268, Sec. 10(e), 60 Stat. 213; Mar. 31, 1948, ch. 165,
Sec. 1(d), 62 Stat. 101; Apr. 20, 1950, ch. 94, title I, Sec. 122, 64
Stat. 59; Aug. 11, 1955, ch. 783, title I, Sec. 104, 69 Stat. 637; Pub.
L. 88-560, title I, Sec. 105(d), (f), Sept. 2, 1964, 78 Stat. 772, 774;
Pub. L. 89-117, title XI, Sec. 1108(p), Aug. 10, 1965, 79 Stat. 506;
Pub. L. 90-19, Sec. 1(a)(3), (4), (d), May 25, 1967, 81 Stat. 17, 18.)
References in Text
The General Insurance Fund, referred to in text, was established by
section 1735c of this title.
The Housing Amendments of 1955, referred to in subsec. (f)(2), is
act Aug. 11, 1955, ch. 783, 69 Stat. 635, as amended. For complete
classification of this Act to the Code, see Short Title of 1955
Amendments note set out under section 1701 of this title and Tables.
Amendments
1967--Pub. L. 90-19, Sec. 1(a)(3), substituted ``Secretary'' for
``Commissioner'' wherever appearing in subsecs. (a), (a)(2), (b) to (e),
(f)(1), (f)(1)(i), (ii), (f)(2), (3), (g), and (h).
Pub. L. 90-19, Sec. 1(a)(4), substituted ``Secretary's'' for
``Commissioner's'' wherever appearing in subsecs. (b) and (f)(3) of this
section.
Subsec. (g). Pub. L. 90-19, Sec. 1(d), substituted ``an officer''
for ``the Commissioner or by any Assistant Commissioner''.
1965--Subsecs. (c), (d), (f)(1)(i). Pub. L. 89-117 substituted
``General Insurance Fund'' for ``War Housing Insurance Fund''.
1964--Subsec. (a). Pub. L. 88-560, Sec. 105(d)(1), (f), inserted
``Provided further, That with respect to any debentures issued on or
after September 2, 1964, the Commissioner may, with the consent of the
mortgagee (in lieu of issuing a certificate of claim as provided in
subsection (e)), include in debentures, in addition to amounts otherwise
allowed for such costs, an amount not to exceed one-third of the total
foreclosure, acquisition, and conveyance costs actually paid by the
mortgagee and approved by the Commissioner, but in no event may the
total allowance for such costs exceed the amount actually paid by the
mortgagee:'' and struck out of third sentence ``paid after either of
such dates'' after ``mortgage insurance premiums'', respectively.
Subsec. (c). Pub. L. 88-560, Sec. 105(d)(2), increased limitation on
difference between value of mortgage and aggregate face value of
debentures issued from $50 to $350.
Subsec. (d). Pub. L. 88-560, Sec. 105(d)(3), substituted in second
sentence ``default, except that debentures issued pursuant to claims for
insurance filed on or after September 2, 1964, shall be dated as of the
date of default or as of such later date as the Commissioner, in his
discretion, may establish by regulation. The debentures'' for ``default,
and''.
Subsec. (f). Pub. L. 88-560, Sec. 105(d)(4)-(8), designated
introductory par. as par. (1) and substituted ``If, after deducting (in
such manner and amount as the Commissioner shall determine to be
equitable and in accordance with sound accounting practice) the expenses
incurred by the Commissioner, the net amount realized from any property
conveyed to the Commissioner under this section and the claims assigned
therewith exceed the face value'' for ``If the net amount realized from
any property conveyed to the Commissioner under this section and the
claims assigned therewith, after deducting all expenses incurred by the
Commissioner in handling, dealing with, and disposing of such property
and in collecting such claims, exceeds the face value''; redesignated
former par. (1) as (i) and substituted ``property: Provided, That on and
after September 2, 1964, any excess remaining after payment to the
holder of the full amount of the certificate of claim shall be retained
by the Commissioner and credited to the War Housing Insurance Fund;
and'' for ``property; and''; redesignated former par. (2) as (ii);
designated concluding par. as par. (2) and inserted proviso; and added
par. (3), respectively.
1955--Subsec. (f). Act Aug. 11, 1955, authorized the Commissioner to
effect the settlement of certificates of claim and refunds at any time
after the sale or transfer of title to the property.
1950--Act Apr. 20, 1950, substituted ``Commissioner'' for
``Administrator'' wherever appearing.
1948--Subsec. (b). Act Mar. 31, 1948, substituted ``value'' for
``necessary current cost''.
1946--Subsec. (b). Act May 22, 1946, substituted ``Administrator's
estimate of the necessary current cost'' after ``10 per centum of the''
for ``appraised value of such property as determined by the
Administrator''.
1943--Subsec. (a). Act Oct. 14, 1943, inserted proviso dealing with
losses due to nonforeclosure of mortgages to last sentence.
1942--Act May 26, 1942, Sec. 14(b), substituted ``War'' and ``war''
for ``Defense'' and ``defense'' wherever occurring.
Subsec. (a). Act May 26, 1942, Sec. 5, substituted ``section 1738 of
this title'' for ``this subchapter''.
Subsec. (c). Act May 26, 1942, Sec. 6, substituted ``subchapter''
for ``section''.
Subsec. (d). Act May 26, 1942, Sec. 7, amended subsec. (d).
Subsec. (g). Act May 26, 1942, Sec. 8, substituted ``subchapter''
for ``section'' and inserted ``with respect to mortgages insured under
section 1738 of this title''.
Section Referred to in Other Sections
This section is referred to in sections 1743, 1744, 1746, 1748b of
this title; title 5 sections 551, 701.
