§ 1748b. — Insurance of mortgages.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1748b]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER VIII--ARMED SERVICES HOUSING MORTGAGE INSURANCE
Sec. 1748b. Insurance of mortgages
(a) Aggregate amount of insurance; termination date
In order to assist in relieving the acute shortage and urgent need
for family housing which now exists at or in areas adjacent to military
installations because of uncertainty as to the permanency of such
installations and to increase the supply of necessary family housing
accommodations for personnel at such installations, the Secretary is
authorized, upon application of the mortgagee, to insure mortgages
(including advances on such mortgages during construction) which are
eligible for insurance as hereinafter provided, and, upon such terms as
the Secretary may prescribe, to make commitments for so insuring such
mortgages prior to the date of their execution or disbursement thereon:
Provided, That the aggregate amount of principal obligations of all
mortgages insured under this subchapter (except mortgages insured
pursuant to the provisions of this subchapter in effect prior to August
11, 1955) shall not exceed $2,300,000,000: And provided further, That
the limitation in section 1715h of this title shall not apply to this
subchapter: And provided further, That no more mortgages shall be
insured under this section after October 1, 1962, except pursuant to a
commitment to insure before such date, and not more than twenty-eight
thousand family housing units shall be contracted for after June 30,
1959, pursuant to any mortgage insured under this section after such
date.
(b) Eligibility for insurance
To be eligible for insurance under this subchapter a mortgage shall
meet the following conditions:
(1) The mortgaged property shall be held by a mortgagor approved
by the Secretary. The Secretary may, in his discretion, require such
mortgagor to be regulated or restricted as to capital structure, and
methods of operation. The Secretary may make such contracts with,
and acquire for not to exceed $100 stock or interest in, any such
mortgagor, as the Secretary may deem necessary to render effective
such restriction or regulation. Such stock or interest shall be paid
for out of the General Insurance Fund, and shall be redeemed by the
mortgagor at par upon the termination of all obligations of the
Secretary under the insurance.
(2) The mortgaged property shall be designed for use for
residential purposes by personnel of the armed services and situated
at or near a military installation, and the Secretary of Defense or
his designee shall have certified that there is no intention, so far
as can reasonably be foreseen, to substantially curtail the
personnel assigned or to be assigned to such installation, and (i)
shall have determined that for reasons of safety, security, or other
essential military requirements, it is necessary that the personnel
involved reside in public quarters: Provided, however, That for the
purposes of this subsection housing covered by a mortgage insured,
or for which a commitment to insure has been issued, under this
section prior to August 11, 1955, may be considered the same as
available quarters, and (ii) with the approval of the Secretary,
shall have determined that adequate housing is not available for
such personnel at reasonable rentals within reasonable commuting
distance of the installation and that the mortgaged property will
not, so far as can reasonably be foreseen, substantially curtail
occupancy in existing housing covered by mortgages insured under
this chapter. The housing accommodations shall comply with such
standards and conditions as the Secretary may prescribe to establish
the acceptability of such property for mortgage insurance, except
that the certification of the Secretary of Defense or his designee
shall (for purposes of mortgage insurance under this subchapter) be
conclusive evidence to the Secretary of the existence of the need
for such housing. However, if the Secretary does not concur in the
housing needs as certified by the Secretary of Defense, the
Secretary may require the Secretary of Defense to guarantee the
General Insurance Fund against loss with respect to the mortgage
covering such housing. There are authorized to be appropriated such
sums as may be necessary to provide for payment to meet losses
arising from such guaranty.
(3) The mortgage shall involve a principal obligation in an
amount--
(A) not to exceed the amount which the Secretary estimates
will be the replacement cost of the property or project when the
proposed improvements are completed (the cost of the property or
project as such term is used in this paragraph may include the
cost of the land, the physical improvements, and utilities
within the boundaries of the property or project);
(B) not to exceed an average of $16,500 per family unit for
such part of such property or project (including ranges,
refrigerators, shades, screens, and fixtures) as may be
attributable to dwelling use: Provided, That the replacement
cost of the property or project as determined by the Secretary,
including the estimated value of any usable utilities within the
boundaries of the property or project where owned by the United
States and not provided for out of the proceeds of the mortgage,
shall not exceed an average of $16,500 per family unit: Provided
further, That should the financing of housing to be constructed
pursuant to a single invitation for bids be accomplished by two
or more mortgages, the principal obligation of any single
mortgage may exceed an average of $16,500 per family unit if the
sum of the principal obligations of all mortgages for such
housing does not exceed an average of $16,500 per family unit:
And provided further, That subject to the limitations of this
paragraph no family unit included in any mortgaged property
shall be contracted for after June 8, 1960 if the cost of such
unit exceeds $19,800; and
(C) not to exceed the bid of the eligible bidder with
respect to the property or project under section 1594 of title
42.
The mortgage shall provide for complete amortization by periodic
payments within such terms as the Secretary shall prescribe, but not to
exceed thirty years from the beginning of amortization of the mortgage,
and shall bear interest (exclusive of premium charges for insurance) as
not to exceed 4\1/2\ per centum per annum of the amount of the principal
obligation outstanding at any time. The Secretary may consent to the
release of a part or parts of the mortgaged property from the lien of
the mortgage upon such terms and conditions as he may prescribe and the
mortgage may provide for such release. The property or project may
include such nondwelling facilities as the Secretary deems adequate to
serve the occupants.
(c) Premium charges
The Secretary is authorized to fix a premium charge for the
insurance of mortgages under this subchapter but in the case of any
mortgage such charge shall not be less than an amount equivalent to one-
half of 1 per centum per annum nor more than an amount equivalent to
1\1/2\ per centum per annum of the amount of the principal obligation of
the mortgage outstanding at any time, without taking into account
delinquent payments or prepayments. Such premium charges shall be
payable by the mortgagee, either in cash, or in debentures issued by the
Secretary under this subchapter at par plus accrued interest, in such
manner as may be prescribed by the Secretary: Provided, That the
Secretary may require the payment of one or more such premium charges at
the time the mortgage is insured, at such discount rate as he may
prescribe not in excess of the interest rate specified in the mortgage.
If the Secretary finds, upon the presentation of a mortgage for
insurance and the tender of the initial premium charge and such other
charges as the Secretary may require, that the mortgage complies with
the provisions of this subchapter, such mortgage may be accepted for
insurance by endorsement or otherwise as the Secretary may prescribe. In
the event that the principal obligation of any mortgage accepted for
insurance under this subchapter is paid in full prior to the maturity
date, the Secretary is authorized to refund to the mortgagee for the
account of the mortgagor all, or such portion as he shall determine to
be equitable, of the current unearned premium charges theretofore paid.
The Secretary may reduce the payment of premiums provided for herein.
The Secretary is further authorized to reduce the amount of the premium
charge below one-half of 1 per centum per annum with respect to any
mortgage on property acquired by the Secretary of Defense or his
designee if the mortgage is insured pursuant to the provisions of this
subchapter as in effect prior to August 11, 1955.
(d) Default by mortgagor; rights of mortgagee
The failure of the mortgagor to make any payment due under or
provided to be paid by the terms of a mortgage insured under this
subchapter shall be considered a default under such mortgage, and, if
such default continues for a period of thirty days, the mortgagee shall
be entitled to receive the benefits of the insurance as hereinafter
provided, upon assignment, transfer, and delivery to the Secretary,
within a period and in accordance with rules and regulations to be
prescribed by the Secretary of (1) all rights and interest arising under
the mortgage so in default; (2) all claims of the mortgagee against the
mortgagor or others, arising out of the mortgage transactions; (3) all
policies of title or other insurance or surety bonds or other guaranties
and any and all claims thereunder; (4) any balance of the mortgage loan
not advanced to the mortgagor; (5) any cash or property held by the
mortgagee, or to which it is entitled, as deposits made for the account
of the mortgagor and which have not been applied in reduction of the
principal of the mortgage indebtedness; and (6) all records, documents,
books, papers, and accounts relating to the mortgage transaction. Upon
such assignment, transfer, and delivery, the obligation of the mortgagee
to pay the premium charges for mortgage insurance shall cease, and the
Secretary shall, subject to the cash adjustment provided for in
subsection (e) of this section, 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 default, the amount the mortgagee may have paid for (A)
taxes, special assessments, and water rates, which are liens prior to
the mortgage; (B) insurance on the property; and (C) reasonable expenses
for the completion and preservation of the property and any mortgage
insurance premiums paid after default; less the sum of (i) any amount
received on account of the mortgage after such date; and (ii) any net
income received by the mortgagee from the property after such date.
(e) Debentures; issuance; 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 $50, shall
be adjusted by the payment of cash by the Secretary to the mortgagee
from the General Insurance Fund.
(f) Debentures; execution; signature; negotiability; interest rate; tax
exemption; guarantee
Debentures issued under this subchapter 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 of default
as determined in accordance with subsection (d) of this section, and
shall bear interest from such date at a rate established by the
Secretary pursuant to section 1715o of this title, payable semiannually
on the 1st day of January and the 1st day of July of each year, and
shall mature twenty 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. They 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 the General Insurance Fund fails to pay upon
demand, when due, the principal of or interest on any debentures so
guaranteed, the Secretary of the Treasury shall pay to the holders the
amount thereof which is authorized to be 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.
(g) Claim certificates
The certificate of claim issued by the Secretary to any mortgagee in
connection with the insurance of mortgages under this subchapter shall
be for an amount determined in accordance with subsections (e) and (f)
of section 1739 of this title, except that any amount remaining after
the payment of the full amount under the certificate of claim shall be
retained by the Secretary and credited to the General Insurance Fund.
(h) Laws applicable
The provisions of section 1713(k) and (l) of this title shall be
applicable to mortgages insured under this subchapter and to property
acquired by the Secretary hereunder, except that as applied to such
mortgages and property, the reference in section 1713(k) of this title
to subsection (g) shall be construed to refer to subsection (d) of this
section.
(i) Secretary's additional powers to insure certain mortgages
The Secretary shall also have power to insure under this subchapter
or subchapter II of this chapter any mortgage executed in connection
with the sale by him of any property acquired under this subchapter
without regard to any limit as to eligibility, time or aggregate amount
contained in this subchapter or subchapter II of this chapter.
(j) Conclusiveness and validity of insurance contract
Any contract of insurance executed by the Secretary under this
subchapter shall be conclusive evidence of the eligibility of the
mortgage for insurance and the validity of any contract of insurance so
executed shall be incontestable in the hands of an approved mortgagee
from the date of the execution of such contract, except for fraud or
misrepresentation on the part of such approved mortgagee.
(k) Certification as to overtime wages paid to laborers and mechanics
The Secretary shall not insure any mortgage under this section
unless the principal contractor or contractors engaged in the
construction of the project involved file a certificate or certificates
(at such times, in the course of construction or otherwise, as the
Secretary may prescribe) certifying that the laborers and mechanics
employed in the construction of such project have been paid not less
than one and one-half times the regular rate of pay for employment in
excess of eight hours in any one day or in excess of forty hours in any
one week.
(June 27, 1934, ch. 847, title VIII, Sec. 803, as added Aug. 8, 1949,
ch. 403, Sec. 1, 63 Stat. 571; amended Sept. 1, 1951, ch. 378, title VI,
Sec. 601(a)-(c), 65 Stat. 312; June 30, 1953, ch. 170, Sec. 10, 67 Stat.
124; June 29, 1954, ch. 410, Sec. 1(2), 68 Stat. 320; Aug. 2, 1954, ch.
649, title I, Secs. 112(c), 128(a), 130, 68 Stat. 593, 609; June 30,
1955, ch. 251, Sec. 1(2), 69 Stat. 225; Aug. 11, 1955, ch. 783, title
IV, Sec. 401, 69 Stat. 647; Aug. 7, 1956, ch. 1029, title V, Secs. 502-
506(a), 70 Stat. 1109, 1110; Pub. L. 85-104, title I, Sec. 108(c), title
V, Secs. 501, 502, July 12, 1957, 71 Stat. 297, 303; Pub. L. 85-364,
Sec. 3(b), Apr. 1, 1958, 72 Stat. 73; Pub. L. 86-149, title IV,
Sec. 414(a), Aug. 10, 1959, 73 Stat. 322; Pub. L. 86-372, title VII,
Sec. 701, Sept. 23, 1959, 73 Stat. 682; Pub. L. 86-500, title V,
Sec. 507(a), (c), June 8, 1960, 74 Stat. 185, 186; Pub. L. 87-57, title
VI, Sec. 607(a), June 27, 1961, 75 Stat. 111; Pub. L. 87-70, title VI,
Sec. 604(d), June 30, 1961, 75 Stat. 177; Pub. L. 87-623, Sec. 1, Aug.
31, 1962, 76 Stat. 418; Pub. L. 89-117, title XI, Sec. 1108(u), Aug. 10,
1965, 79 Stat. 506; Pub. L. 90-19, Sec. 1(a)(3), (p), May 25, 1967, 81
Stat. 17, 19; Pub. L. 96-470, title I, Sec. 107(b), Oct. 19, 1980, 94
Stat. 2238.)
References in Text
The General Insurance Fund, referred to in text, was established by
section 1735c of this title.
Amendments
1980--Subsec. (b)(2). Pub. L. 96-470 struck out provision requiring
the Secretary to report to the Committees on Banking and Currency of the
Senate and the House of Representatives each instance in which he has
required the Secretary of Defense to guarantee the General Insurance
Fund and the reasons therefor.
1967--Pub. L. 90-19, Sec. 1(a)(3), substituted ``Secretary'' for
``Commissioner'' wherever appearing in subsecs. (a), (b)(1), (2),
(3)(A), (B), following (C), and (c) to (k).
Subsec. (b)(2). Pub. L. 90-19, Sec. 1(p)(1)-(4), substituted
``Secretary of Defense'' for ``Secretary'' in first, third, and fourth
sentences.
1965--Subsecs. (b)(1), (b)(2), (e), (f), (g). Pub. L. 89-117,
Sec. 1108(u)(1), substituted ``General Insurance Fund'' for ``Armed
Services Housing Mortgage Insurance Fund'' wherever appearing.
Subsec. (h). Pub. L. 89-117, Sec. 1108(u)(2), struck out provision
that, as applied to mortgages insured under this subchapter and to
property acquired by the Commissioner hereunder, reference in subsecs.
(k) and (l) of section 1713 of this title to the ``Housing Fund'' shall
be construed to refer to the ``Armed Services Housing Mortgage Insurance
Fund''.
1962--Subsec. (a). Pub. L. 87-623 substituted ``mortgages shall be
insured under this section after October 1, 1962'' for ``mortgages shall
be insured under this subchapter after October 1, 1962''.
1961--Subsec. (a). Pub. L. 87-70 made amendment identical to that
made by Pub. L. 87-57.
Pub. L. 87-57 substituted ``October 1, 1962'' for ``October 1,
1961'', and ``twenty-eight thousand family units'' for ``twenty-five
thousand family housing units''.
1960--Subsec. (a). Pub. L. 86-500, Sec. 507(a), substituted
``twenty-five thousand family housing units'' for ``twenty thousand
family housing units''.
Subsec. (b)(3). Pub. L. 86-500, Sec. 507(c), inserted proviso
prohibiting, subject to the limitations of par. (B), the contracting for
any family unit included in any mortgaged property after June 8, 1960,
if the cost of the unit exceeds $19,800.
1959--Subsec. (a). Pub. L. 86-372, Sec. 701(a), substituted
``October 1, 1961'' for ``September 30, 1960''.
Pub. L. 86-149 inserted provisions in subsec. (a) to prohibit
insurance of mortgages under this subchapter after Sept. 30, 1960, and
to limit the number of housing units which may be contracted for after
June 30, 1959 to not more than 20,000.
Subsec. (b)(3). Pub. L. 86-372, Sec. 701(b), (c), substituted ``but
not to exceed thirty years from the beginning of amortization of the
mortgage'' for ``have a maturity of not to exceed twenty-five years'',
and inserted provisions authorizing the property or project to include
such nondwelling facilities as the Commission deems adequate to serve
the occupants.
Subsec. (c). Pub. L. 86-372, Sec. 701(d), authorized the
Commissioner to reduce the amount of the premium charge below one-half
of 1 per centum per annum with respect to any mortgage on property
acquired by the Secretary of Defense or his designee if the mortgage is
insured pursuant to the provisions of this subchapter as in effect prior
to August 11, 1955.
Subsec. (k). Pub. L. 86-372, Sec. 701(e), added subsec. (k).
1958--Subsec. (b). Pub. L. 85-364 increased the maximum amount of
interest from 4 to 4\1/2\ per centum per annum.
1957--Subsec. (a). Pub. L. 85-104, Sec. 501, substituted ``June 30,
1959'' for ``June 30, 1958''.
Subsec. (b)(3)(B). Pub. L. 85-104, Sec. 502, inserted proviso that
should financing of housing to be constructed pursuant to a single
invitation for bids be accomplished by two or more mortgages, any single
mortgage may exceed an average of $16,500 if sum of all mortgages for
such housing does not exceed average of $16,500.
Subsec. (f). Pub. L. 85-104, Sec. 108(c), substituted, in second
sentence, ``established by the Commissioner pursuant to section 1715o of
this title'' for ``determined by the Commissioner 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''.
1956--Subsec. (a). Act Aug. 7, 1956, Secs. 502, 503, inserted
``(except mortgages insured pursuant to the provisions of this
subchapter in effect prior to August 11, 1955)'' and substituted
``$2,300,000'' for ``$1,363,500,000'' in first proviso and ``June 30,
1958'' for ``September 30, 1956'' in third proviso.
Subsec. (b)(2). Act Aug. 7, 1956, Sec. 504, required approval of
Commissioner, with determination of Secretary, that new units will not
substantially curtail occupancy in existing houses covered by mortgages
insured under this chapter, and provided that if Commissioner requires
Secretary to guarantee the armed services housing mortgages insurance
fund from loss, he shall report to the Committees on Banking and
Currency of the Senate and House of Representatives each instance in
which he required such a guarantee.
Subsec. (b)(3)(B). Act Aug. 7, 1956, Sec. 505, substituted
``$16,500'' for ``$13,500'' in two places, and inserted ``(including
ranges, refrigerators, shades, screens, and fixtures)''.
Subsec. (b)(3)(C). Act Aug. 7, 1956, Sec. 506(a), substituted
``eligible bidder with respect to'' for ``eligible builder of''.
1955--Subsec. (a). Act Aug. 11, 1955, increased authorization from
$500,000,000 to $1,363,500,000, and extended from June 30, 1955, to
September 30, 1956, period within which mortgages can be insured.
Act June 30, 1955, extended termination date, with respect to
authority to insure, from June 30, 1955, to July 31, 1955.
Subsec. (b). Act Aug. 11, 1955, authorized issuance of insurance for
units necessary for reasons of safety, security, or other essential
military requirements, or where adequate housing is not available at
reasonable rentals within reasonable commuting distance, limited the
amount of the mortgage to not more than the replacement cost of the
property or project, restricted the amount of the mortgage to not more
than an average of $13,500 for a family unit, and required the mortgage
to mature in not more than 25 years.
Subsec. (c). Act Aug. 11, 1955, struck out authorization of
Commissioner to require payment by mortgagee of an adjusted premium
charge in event that principal obligation of mortgage is paid in full
prior to maturity date.
Subsec. (d). Act Aug. 11, 1955, struck out provisions which
authorized mortgagee to proceed to foreclose mortgage in event of a
default, and which granted mortgagee right to elect benefits of
insurance when the United States acquires, or commences condemnation
proceedings to acquire, all or a substantial part, of mortgaged
property.
Subsecs. (e) to (h). Act Aug. 11, 1955, substituted ``Armed Services
Housing Mortgage Insurance Fund'' for ``Military Housing Insurance
Fund,'' wherever appearing.
Subsec. (i). Act Aug. 11, 1955, struck out the power of the
Commissioner to insure under subchapter VI of this chapter.
Subsec. (j). Act Aug. 11, 1955, reenacted provisions without change.
Subsec. (k). Act Aug. 11, 1955, struck out provisions which
authorized utilization of the powers of the Federal National Mortgage
Association and of any other Federal corporation or other Federal agency
to purchase, service, or sell any mortgages, or partial interest
therein.
1954--Subsec. (a). Acts Aug. 2, 1954, Sec. 128(a), and June 29,
1954, extended termination date, with respect to authority to insure,
from July 31, 1954, to June 30, 1955, and from July 1, 1954, to July 31,
1954, respectively.
Subsec. (b). Act Aug. 2, 1954, Sec. 130, in par. immediately
following subpar. (C) of par. (3) of the subsection, substituted the
requirement that the mortgagor shall enter into the agreement required
by section 1715r of this title for former provisions relating to
certification of builders' costs, the certifications now being
prescribed into section 1715r.
Subsec. (f). Act Aug. 2, 1954, Sec. 112(c), in second sentence,
substituted a twenty-year period for ten-year period, with respect to
the maturity of debentures.
1953--Subsec. (a). Act June 30, 1953, Sec. 10(a), in second proviso
substituted ``July 1, 1954'' for ``July 1, 1953''.
Subsec. (b). Act June 30, 1953, Sec. 10(b), (c), inserted par.
commencing ``The mortgagor shall agree''; and, in first sentence of par.
commencing ``The mortgage shall provide'', substituted ``4\1/2\ per
centum'' for ``4 per centum''.
1951--Subsec. (a). Act Sept. 1, 1951, Sec. 601(a), substituted
``July 1, 1953'' for ``July 1, 1951'' in second proviso.
Subsec. (b)(3)(C). Act Sept. 1, 1951, Sec. 601(b), inserted proviso.
Subsec. (d). Act Sept. 1, 1951, Sec. 601(c), inserted reference to
the Atomic Energy Commission in last sentence.
Effective Date of 1954 Amendment
Amendment by section 112(c) of act Aug. 2, 1954, as not applicable
in any case where the mortgage involved was insured or the commitment
for such insurance was issued prior to Aug. 2, 1954, see section 112(e)
of that act, set out as a note under section 1710 of this title.
Effective Date of 1951 Amendment
Act Sept. 1, 1951, Sec. 601(a), provided that the amendment made by
that section is effective July 1, 1951.
Section Referred to in Other Sections
This section is referred to in sections 1715c, 1731b, 1748h-1,
1748h-2, 1748h-3 of this title.
