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Page 535 TITLE 12鈥擝ANKS AND BANKING 搂 1708 ... - Justia


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									Page 535                                  TITLE 12—BANKS AND BANKING                                                   § 1708

Pub. L. 98–479, title I, § 101(a)(14), Oct. 17, 1984, 98 Stat.     I, § 122, 64 Stat. 59; July 14, 1952, ch. 723, § 10(a)(2),
2220; Pub. L. 100–242, title V, § 517(a), (c)–(e), Feb. 5, 1988,   66 Stat. 603; Pub. L. 86–70, § 10(a), June 25, 1959,
101 Stat. 1936, 1937; Pub. L. 101–73, title V, § 501(e)(1),        73 Stat. 142; Pub. L. 86–624, § 6, July 12, 1960, 74
Aug. 9, 1989, 103 Stat. 394; Pub. L. 101–235, title I, § 126(a),
(b), Dec. 15, 1989, 103 Stat. 2025; Pub. L. 101–625, title IX,
                                                                   Stat. 411; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
§ 914(a), (b), Nov. 28, 1990, 104 Stat. 4394, 4395, related to     Stat. 17; Pub. L. 91–152, title IV, § 403(c)(1), Dec.
urban homestead program of unit of general local gov-              24, 1969, 83 Stat. 395; Pub. L. 96–399, title III, § 306,
ernment, State, or designated public agency.                       Oct. 8, 1980, 94 Stat. 1640; Pub. L. 98–181, title IV,
                                                                   § 407(b), Nov. 30, 1983, 97 Stat. 1211; Pub. L.
                                                                   104–204, title IV, § 425(b), Sept. 26, 1996, 110 Stat.
  Repeal effective Oct. 1, 1991, and except with respect           2928.)
to projects and programs for which binding commit-
ments have been entered into prior to Oct. 1, 1991, no                                   AMENDMENTS
new grants or loans to be made after Oct. 1, 1991, under             1996—Subsecs. (e), (f). Pub. L. 104–204 added subsecs.
this section, see section 12839(a)(5), (b)(1) of Title 42,         (e) and (f).
The Public Health and Welfare.                                       1983—Subsec. (d). Pub. L. 98–181 inserted ‘‘American
 SUBCHAPTER II—MORTGAGE INSURANCE                                  Samoa,’’ after ‘‘Pacific Islands,’’.
                                                                     1980—Subsec. (a). Pub. L. 96–399 substituted ‘‘ten
      SUBCHAPTER REFERRED TO IN OTHER SECTIONS                     years to run beyond the maturity date of the mort-
                                                                   gage’’ for ‘‘fifty years to run from the date the mort-
  This subchapter is referred to in sections 1701s, 1701x,
                                                                   gage was executed’’.
1702, 1703, 1705, 1709–1a, 1715f, 1715z–1, 1715z–4a, 1715z–13a,
                                                                     1969—Subsec. (d). Pub. L. 91–152 inserted ‘‘the Trust
1715z–13b, 1721, 1731a, 1735f–2, 1735f–6, 1735f–8, 1735f–9,
                                                                   Territory of the Pacific Islands’’ after ‘‘Guam’’.
1735f–10, 1735f–14, 1743, 1748b, 2803, 2810, 3702, 3751, 3752 of
                                                                     1967—Subsec. (b). Pub. L. 90–19 substituted ‘‘Sec-
this title; title 38 sections 3707, 3707A, 3728; title 42 sec-
                                                                   retary’’ for ‘‘Commissioner’’.
tions 1437aaa–3, 1472, 1479, 3535, 5403, 12773, 12852, 12874.
                                                                     1960—Subsec. (d). Pub. L. 86–624 struck out ‘‘Hawaii,’’
§ 1707. Definitions                                                before ‘‘Puerto Rico’’.
                                                                     1959—Subsec. (d). Pub. L. 86–70 struck out ‘‘Alaska,’’
  As used in section 1709 of this title—                           before ‘‘Hawaii’’.
  (a) The term ‘‘mortgage’’ means a first mort-                      1952—Subsec. (d). Act July 14, 1952, inserted ‘‘Guam,’’
gage on real estate, in fee simple, or on a lease-                 after ‘‘District of Columbia’’.
hold (1) under a lease for not less than ninety-                     1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
                                                                   for ‘‘Administrator’’.
nine years which is renewable or (2) under a
                                                                     1941—Subsec. (a). Act Mar. 28, 1941, § 4(a)(1), struck
lease having a period of not less than ten years                   out ‘‘district, or Territory’’.
to run beyond the maturity date of the mort-                         Subsec. (d). Act Mar. 28, 1941, § 4(a)(2), added subsec.
gage; and the term ‘‘first mortgage’’ means such                   (d).
classes of first liens as are commonly given to                      1938—Subsec. (a)(2). Act Feb. 3, 1938, struck out ‘‘upon
secure advances on, or the unpaid purchase price                   which there is located a dwelling for not more than
of, real estate, under the laws of the State, in                   four families which is used in whole or in part for resi-
which the real estate is located, together with                    dential purposes, irrespective of whether such dwelling
                                                                   has a party wall or is otherwise physically connected
the credit instruments, if any, secured thereby.
                                                                   with another dwelling’’ after ‘‘executed’’.
  (b) The term ‘‘mortgagee’’ includes the origi-                     Subsec. (c). Act Feb. 3, 1938, added subsec. (c).
nal lender under a mortgage, and his successors
and assigns approved by the Secretary; and the                        TERMINATION OF TRUST TERRITORY OF THE PACIFIC
term ‘‘mortgagor’’ includes the original bor-                                           ISLANDS
rower under a mortgage and his successors and                        For termination of Trust Territory of the Pacific Is-
assigns.                                                           lands, see note set out preceding section 1681 of Title
  (c) The term ‘‘maturity date’’ means the date                    48, Territories and Insular Possessions.
on which the mortgage indebtedness would be                            IMPROVEMENT OF FINANCING FOR MULTIFAMILY
extinguished if paid in accordance with periodic                                       HOUSING
payments provided for in the mortgage.
                                                                     Pub. L. 102–550, title V, subtitle C, Oct. 28, 1992, 106
  (d) The term ‘‘State’’ includes the several                      Stat. 3794, as amended, which related to improvement
States, and Puerto Rico, the District of Colum-                    of financing for multifamily housing and was formerly
bia, Guam, the Trust Territory of the Pacific Is-                  set out as a note under this section, was transferred or
lands, American Samoa, and the Virgin Islands.                     omitted as follows:
  (e) The term ‘‘family member’’ means, with re-                     Section 541 of Pub. L. 102–550 was transferred and is
spect to a mortgagor under such section, a child,                  set out as a note under section 1701 of this title;
parent, or grandparent of the mortgagor (or the                      Section 542 of Pub. L. 102–550 was transferred to sec-
mortgagor’s spouse). In determining whether                        tion 1715z–22 of this title;
                                                                     Section 543 of Pub. L. 102–550 was omitted from the
any of the relationships referred to in the pre-                   Code;
ceding sentence exist, a legally adopted son or                      Section 544 of Pub. L. 102–550 was transferred to sec-
daughter of an individual (and a child who is a                    tion 1715z–22a of this title.
member of an individual’s household, if placed
with such individual by an authorized placement                           SECTION REFERRED TO IN OTHER SECTIONS
agency for legal adoption by such individual),                       This section is referred to in sections 1706c, 1709,
and a foster child of an individual, shall be                      1715k, 1715l, 1715y, 1715z–1, 1715z–20, 1750 of this title.
treated as a child of such individual by blood.
  (f) The term ‘‘child’’ means, with respect to a                  § 1708. Federal Housing Administration oper-
mortgagor under such section, a son, stepson,                          ations
daughter, or stepdaughter of such mortgagor.                       (a) Mutual Mortgage Insurance Fund
(June 27, 1934, ch. 847, title II, § 201, 48 Stat. 1247;             There is created a Mutual Mortgage Insurance
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 9; Mar. 28, 1941,              Fund (hereinafter referred to as the ‘‘Fund’’),
ch. 31, § 4(a), 55 Stat. 61; Apr. 20, 1950, ch. 94, title          which shall be used by the Secretary as a revolv-
§ 1708                                    TITLE 12—BANKS AND BANKING                             Page 536

ing fund for carrying out the provisions of this          title 42 or employed a person for purposes that
subchapter with respect to mortgages insured              required such person to so register.
under section 1709 of this title as hereinafter             (6) Of the members of the Advisory Board
provided, and there shall be allocated imme-              first appointed, 5 shall have terms of l year,
diately to such Fund the sum of $10,000,000 out of        and 5 shall have terms of 2 years. Their succes-
funds made available to the Secretary for the             sors and all other appointees shall have terms
purposes of this subchapter.                              of 3 years.
(b) Advisory Board                                          (7) The Advisory Board is empowered to con-
                                                          fer with, request information of, and make
  There is created a Federal Housing Adminis-
                                                          recommendations to the Federal Housing
tration Advisory Board (‘‘Board’’) that shall re-
                                                          Commissioner.      The    Commissioner      shall
view operation of the Federal Housing Adminis-
                                                          promptly provide the Advisory Board with
tration, including the activities of the Mort-
                                                          such information as the Board determines to
gagee Review Board, and shall provide advice to
                                                          be necessary to carry out its review of the ac-
the Federal Housing Commissioner with respect
                                                          tivities and policies of the Federal Housing
to the formulation of general policies of the
Federal Housing Administration and such other               (8) The Board shall, not later than December
matters as the Federal Housing Commissioner               31 of each year, submit to the Secretary and
may deem appropriate. The Advisory Board                  the Congress a report of its assessment of the
shall, in all other respects, be subject to the pro-      activities of the Federal Housing Administra-
visions of the Federal Advisory Committee Act.            tion, including the soundness of underwriting
    (1) The Advisory Board shall be composed of
                                                          procedures, the adequacy of information sys-
  15 members to be appointed from among indi-
                                                          tems, the appropriateness of staffing patterns,
  viduals who have substantial expertise and
                                                          the effectiveness of the Mortgagee Review
  broad experience in housing and mortgage
                                                          Board, and other matters related to the Fed-
  lending of whom—
      (A) 9 shall be appointed by the Secretary;          eral Housing Administration’s ability to serve
      (B) 3 shall be appointed by the Chairman            the nation’s homebuyers and renters. Such re-
    and Ranking Minority Member of the Sub-               port shall contain the Board’s recommenda-
    committee on Housing and Urban Affairs of             tions for improvement and include any minor-
    the Committee on Banking, Housing, and                ity views.
    Urban Affairs of the Senate; and                        (9) The Board shall meet in Washington,
      (C) 3 shall be appointed by the Chairman            D.C., not less than twice annually, or more
    and Ranking Minority Member of the Sub-               frequently if requested by the Federal Housing
    committee on Housing and Community De-                Commissioner or a majority of the members.
    velopment of the Committee on Banking, Fi-            The Board shall elect a chair, vice-chair and
    nance and Urban Affairs of the House of Rep-          secretary and adopt methods of procedure. The
    resentatives.                                         Board may establish committees and sub-
                                                          committees as needed.
    (2) Membership on the Advisory Board shall              (10) Subject to the provisions of Section 7 of
  include—                                                the Federal Advisory Committee Act, all
      (A) not less than 4 persons with distin-            members of the Board may be compensated
    guished private sector careers in housing fi-         and shall be entitled to reimbursement from
    nance, lending, management, development               the Department for traveling expenses in-
    or insurance;                                         curred in attendance at meetings of the Board.
      (B) not less than 4 persons with out-                 (11) The Board shall terminate on January 1,
    standing reputations as licensed actuaries,           1995.
    experts in actuarial science, or economics
                                                        (c) Mortgagee Review Board
    related to housing;
      (C) not less than 4 persons with back-              (1) Establishment
    grounds of leadership in representing the in-           There is established within the Federal
    terests of housing consumers;                         Housing Administration the Mortgagee Re-
      (D) not less than 1 person with significant         view Board (‘‘Board’’). The Board is empow-
    experience and a distinguished reputation             ered to initiate the issuance of a letter of rep-
    for work in the enforcement, advocacy, or             rimand, the probation, suspension or with-
    development of fair housing or civil rights           drawal of any mortgagee found to be engaging
    legislation; and                                      in activities in violation of Federal Housing
      (E) not less than 1 person with a back-             Administration requirements or the non-
    ground of leadership representing rural               discrimination requirements of the Equal
    housing interests.                                    Credit Opportunity Act [15 U.S.C. 1691 et seq.],
    (3) Members of the Advisory Board shall be            the Fair Housing Act [42 U.S.C. 3601 et seq.], or
  selected to ensure, to the greatest extent prac-        Executive Order 11063.
  ticable, geographical representation or every           (2) Composition
  region of the country.                                    The Board shall consist of—
    (4) Not more than 8 members of the Advisory               (A) the Assistant Secretary of Housing/
  Board may be from any one political party.                Federal Housing Commissioner;
    (5) Membership of the Advisory Board shall                (B) the General Counsel of the Depart-
  not include any person who, during the pre-               ment;
  vious 24-month period, was required to register             (C) the President of the Government Na-
  with the Secretary under section 3537b(c) 1 of            tional Mortgage Association;
                                                              (D) the Assistant Secretary for Adminis-
 1 See   References in Text note below.                     tration;
Page 537                                     TITLE 12—BANKS AND BANKING                               § 1708

     (E) the Assistant Secretary for Fair Hous-              the Federal Housing Administration shall
   ing Enforcement (in cases involving viola-                not commit to insure any mortgage origi-
   tions of nondiscrimination requirements);                 nated by the suspended mortgagee.
     (F) the Chief Financial Officer of the De-              (D) Withdrawal
   partment; and
                                                               The Board may issue an order withdrawing
     (G) the Director of the Enforcement Cen-
                                                             a mortgagee if the Board has made a deter-
   ter; or their designees.
                                                             mination of a serious violation or repeated
 (3) Actions authorized                                      violations by the mortgagee. The Board
   When any report, audit, investigation, or                 shall determine the terms of such with-
 other information before the Board discloses                drawal, but the term shall be not less than
 that a basis for an administrative action                   1 year. Where the Board has determined that
 against a mortgagee exists, the Board shall                 the violation is egregious or willful, the
 take one of the following administrative ac-                withdrawal shall be permanent.
 tions:                                                      (E) Settlements
   (A) Letter of reprimand                                     The Board may at any time enter into a
     The Board may issue a letter of reprimand               settlement agreement with a mortgagee to
   only once to a mortgagee without taking ac-               resolve any outstanding grounds for an ac-
   tion under subparagraphs 2 (B), (C), or (D) of            tion. Agreements may include provisions
   this section. A letter of reprimand shall ex-             such as—
   plain the violation and describe actions the                  (i) cessation of any violation;
   mortgagee should take to correct the viola-                   (ii) correction or mitigation of the ef-
   tion.                                                       fects of any violation;
                                                                 (iii) repayment of any sums of money
   (B) Probation                                               wrongfully or incorrectly paid to the
     The Board may place a mortgagee on pro-                   mortgagee by a mortgagor, by a seller or
   bation for a specified period of time not to                by the Federal Housing Administration;
   exceed 6 months for the purpose of evalu-                     (iv) actions to collect sums of money
   ating the mortgagee’s compliance with Fed-                  wrongfully or incorrectly paid by the
   eral Housing Administration requirements,                   mortgagee to a third party;
   the Equal Credit Opportunity Act [15 U.S.C.                   (v) indemnification of the Federal Hous-
   1691 et seq.], the Fair Housing Act [42 U.S.C.              ing Administration for mortgage insur-
   3601 et seq.], Executive Order 11063, or orders             ance claims on mortgages originated in
   of the Board. During the probation period,                  violation of Federal Housing Administra-
   the Board may impose reasonable additional                  tion requirements;
   requirements on a mortgagee including su-                     (vi) modification of the length of the
   pervision of the mortgagee’s activities by                  penalty imposed; or
   the Federal Housing Administration, peri-                     (vii) implementation of other corrective
   odic reporting to the Federal Housing Com-                  measures acceptable to the Secretary.
   missioner, or submission to Federal Housing                Material failure to comply with the provi-
   Administration audits of internal financial                sions of a settlement agreement shall be suf-
   statements, audits by an independent cer-                  ficient cause for suspension or withdrawal.
   tified public accountant or other audits.
                                                            (4) Notice and hearing
   (C) Suspension
                                                              (A) The Board shall issue a written notice to
     The Board may issue an order temporarily               the mortgagee at least 30 days prior to taking
   suspending a mortgagee’s approval for doing              any action against the mortgagee under sub-
   business with the Federal Housing Adminis-               paragraph (B), (C), or (D) of paragraph (3). The
   tration if (i) there exists adequate evidence            notice shall state the specific violations which
   of a violation or violations and (ii) continu-           have been alleged, and shall direct the mort-
   ation of the mortgagee’s approval, pending               gagee to reply in writing to the Board within
   or at the completion of any audit, investiga-            30 days. If the mortgagee fails to reply during
   tion, or other review, or such administrative            such period, the Board may make a determina-
   or other legal proceedings as may ensue,                 tion without considering any comments of the
   would not be in the public interest or in the            mortgagee.
   best interests of the Department. Notwith-                 (B) If the Board takes action against a mort-
   standing paragraph (4)(A), a suspension shall            gagee under subparagraph (B), (C), or (D) of
   be effective upon issuance by the Board if               paragraph (3), the Board shall promptly notify
   the Board determines that there exists ade-              the mortgagee in writing of the nature, dura-
   quate evidence that immediate action is re-              tion, and specific reasons for the action. If,
   quired to protect the financial interests of             within 30 days of receiving the notice, the
   the Department or the public. A suspension               mortgagee requests a hearing, the Board shall
   shall last for not less than 6 months, and for           hold a hearing on the record regarding the vio-
   not longer than 1 year. The Board may ex-                lations within 30 days of receiving the request.
   tend the suspension for an additional 6                  If a mortgagee fails to request a hearing with-
   months if it determines the extension is in              in such 30-day period, the right of the mort-
   the public interest. If the Board and the                gagee to a hearing shall be considered waived.
   mortgagee agree, these time limits may be                  (C) In any case in which the notification of
   extended. During the period of suspension,               the Board does not result in a hearing (includ-
                                                            ing any settlement by the Board and a mort-
 2 So   in original. Probably should be ‘‘subparagraph’’.   gagee), any information regarding the nature
§ 1708                            TITLE 12—BANKS AND BANKING                                                    Page 538

  of the violation and the resolution of the ac-             (C) a branch office or subsidiary of the
  tion shall be available to the public.                   mortgagee, lender, or loan correspondent; or
  (5) Publication                                            (D) a director, officer, employee, agent, or
    The Secretary shall establish and publish in           other person participating in the conduct of
  the Federal Register a description of and the            the affairs of the mortgagee, lender, or loan
  cause for administrative action against a                correspondent.
  mortgagee.                                             (8) Report required
  (6) Cease-and-desist orders                              The Board, in consultation with the Federal
    (A) Whenever the Secretary, upon request of          Housing Administration Advisory Board, shall
  the Mortgagee Review Board, determines that            annually recommend to the Secretary such
  there is reasonable cause to believe that a            amendments to statute or regulation as the
  mortgagee is violating, has violated, or is            Board determines to be appropriate to ensure
  about to violate, a law, rule or regulation or         the long term financial strength of the Fed-
  any condition imposed in writing by the Sec-           eral Housing Administration fund and the ade-
  retary or the Board, and that such violation           quate support for home mortgage credit.
  could result in significant cost to the Federal      (d) Coordination of GNMA and FHA withdrawal
  Government or the public, the Secretary may              action
  issue a temporary order requiring the mort-
  gagee to cease and desist from any such viola-         (1) Whenever the Federal Housing Administra-
  tion and to take affirmative action to prevent       tion or Government National Mortgage Associa-
  such violation or a continuation of such viola-      tion initiates proceedings that could lead to
  tion pending completion of proceedings of the        withdrawing the mortgagee from participating
  Board with respect to such violation. Such           in the program, the initiating agency shall—
  order shall include a notice of charges in re-           (A) within 24 hours notify the other agency
  spect thereof and shall become effective upon          in writing of the action taken;
  service to the mortgagee. Such order shall re-           (B) provide to the other agency the factual
  main effective and enforceable for a period not        basis for the action taken; and
  to exceed 30 days pending the completion of              (C) if a mortgagee is withdrawn, publish its
  proceedings of the Board with respect to such          decision in the Federal Register.
  violation, unless such order is set aside, lim-        (2) Within 60 days of receipt of a notification
  ited, or suspended by a court in proceedings         of action that could lead to withdrawal under
  authorized by subparagraph (B) of this para-         subsection 3 (1), the Federal Housing Adminis-
  graph. The Board shall provide the mortgagee         tration or the Government National Mortgage
  an opportunity for a hearing on the record, as       Association shall—
  soon as practicable but not later than 20 days           (A) conduct and complete its own investiga-
  after the temporary cease-and-desist order has         tion;
  been served.                                             (B) provide written notification to the other
    (B) Within 10 days after the mortgagee has           agency of its decision, including the factual
  been served with a temporary cease-and-desist          basis for its decision; and
  order, the mortgagee may apply to the United             (C) if a mortgagee is withdrawn, publish its
  States district court for the judicial district in     decision in the Federal Register.
  which the home office of the mortgagee is lo-
  cated, or the United States District Court for       (e) Appraisal standards
  the District of Columbia, for an injunction            (1) The Secretary shall prescribe standards for
  setting aside, limiting of suspending the en-        the appraisal of all property to be insured by the
  forcement, operation, or effectiveness of such       Federal Housing Administration. Such apprais-
  order pending the completion of the adminis-         als shall be performed in accordance with uni-
  trative proceedings pursuant to the notice of        form standards, by individuals who have dem-
  charges served upon the mortgagee, and such          onstrated competence and whose professional
  court shall have jurisdiction to issue such in-      conduct is subject to effective supervision.
  junction.                                            These standards shall require at a minimum—
    (C) In the case of violation or threatened             (A) that the appraisals of properties to be in-
  violation of, or failure to obey, a temporary          sured by the Federal Housing Administration
  cease-and-desist order issued pursuant to this         shall be performed in accordance with gen-
  paragraph, the Secretary may apply to the              erally accepted appraisal standards, such as
  United States district court, or the United            the appraisal standards promulgated by the
  States court of any territory, within the juris-       Appraisal Foundation a not-for-profit corpora-
  diction of which the home office of the mort-          tion established on November 30, 1987 under
  gagee is located, for an injunction to enforce         the laws of Illinois; and
  such order, and, if the court shall determine            (B) that each appraisal be a written state-
  that there has been such violation or threat-          ment used in connection with a real estate
  ened violation or failure to obey, it shall be         transaction that is independently an 4 impar-
  the duty of the court to issue such injunction.        tially prepared by a licensed or certified ap-
  (7) ‘‘Mortgagee’’ defined                              praiser setting forth an opinion of defined
    For purposes of this subsection, the term            value of an adequately described property as
  ‘‘mortgagee’’ means—                                   of a specific date, supported by presentation
       (A) a mortgagee approved under this chap-         and analysis of relevant market information.
       (B) a lender or a loan correspondent ap-         3 So   in original. Probably should be ‘‘paragraph’’.
    proved under subchapter I of this chapter;          4 So   in original. Probably should be ‘‘and’’.
Page 539                                 TITLE 12—BANKS AND BANKING                                                   § 1708

  (2) The Appraisal Subcommittee of the Federal                  701, and which contained a subsec. (c) relating to reg-
Financial Institutions Examination Council                       istration with the Secretary.
shall include the Secretary or his designee.                       The Equal Credit Opportunity Act, referred to in sub-
                                                                 sec. (c)(1), (3)(B), is title VII of Pub. L. 90–321, as added
                                                                 by Pub. L. 93–495, title V, § 503, Oct. 28, 1974, 88 Stat.
    (A) Any mortgagee that is authorized by the                  1521, as amended, which is classified generally to sub-
  Secretary to process mortgages as a direct en-                 chapter IV (§ 1691 et seq.) of chapter 41 of Title 15, Com-
  dorsement mortgagee (pursuant to the single-                   merce and Trade. For complete classification of this
  family home mortgage direct endorsement                        Act to the Code, see Short Title note set out under sec-
  program established by the Secretary) may                      tion 1601 of Title 15 and Tables.
  contract with an appraiser chosen at the dis-                    The Fair Housing Act, referred to in subsec. (c)(1),
  cretion of the mortgagee for the performance                   (3)(B), is title VIII of Pub. L. 90–284, Apr. 11, 1968, 82
                                                                 Stat. 81, as amended, which is classified principally to
  of appraisals in connection with such mort-
                                                                 subchapter I (§ 3601 et seq.) of chapter 45 of Title 42, The
  gages. Such appraisers may include appraisal                   Public Health and Welfare. For complete classification
  companies organized as corporations, partner-                  of this Act to the Code, see Short Title note set out
  ships, or sole proprietorships.                                under section 3601 of Title 42 and Tables.
    (B) Any appraisal conducted pursuant to                        Executive Order 11063, referred to in subsec. (c)(1),
  subparagraph (A) shall be conducted by an in-                  (3)(B), is set out as a note under section 1982 of Title 42.
  dividual who complies with the qualifications                                         AMENDMENTS
  or standards for appraisers established by the
  Secretary pursuant to this subsection.                            2000—Subsec. (c)(2)(E). Pub. L. 106–377, § 1(a)(1) [title
                                                                 II, § 209(c)(1)], struck out ‘‘and’’ at end.
    (C) In conducting an appraisal, such indi-
                                                                    Subsec. (c)(2)(F). Pub. L. 106–377, § 1(a)(1) [title II,
  vidual may utilize the assistance of others,                   § 209(c)(2)], which directed substitution of ‘‘and’’ for ‘‘or
  who shall be under the direct supervision of                   their designees.’’, was executed by inserting ‘‘and’’
  the individual responsible for the appraisal.                  after semicolon to reflect the probable intent of Con-
  The individual responsible for the appraisal                   gress, because the phrase ‘‘or their designees.’’ ap-
  shall personally approve and sign any ap-                      peared at end of par. (2) and did not appear in subpar.
  praisal report.                                                (F).
                                                                    Subsec. (c)(2)(G). Pub. L. 106–377, § 1(a)(1) [title II,
  (4) FEE PANEL APPRAISERS.—                                     § 209(c)(3)], added subpar. (G).
    (A) Any individual who is an employee of an                     1997—Subsec. (c)(3)(C). Pub. L. 105–65 inserted after
  appraisal company (including any company or-                   first sentence ‘‘Notwithstanding paragraph (4)(A), a
  ganized as a corporation, partnership, or sole                 suspension shall be effective upon issuance by the
  proprietorship) and who meets the qualifica-                   Board if the Board determines that there exists ade-
  tions or standards for appraisers and inclusion                quate evidence that immediate action is required to
                                                                 protect the financial interests of the Department or the
  on appraiser fee panels established by the Sec-                public.’’
  retary, shall be eligible for assignment to con-                  1992—Subsec. (b)(11). Pub. L. 102–550, § 502, added par.
  duct appraisals for mortgages under this sub-                  (11).
  chapter in the same manner and on the same                        Subsec. (c)(3)(C). Pub. L. 102–550, § 518, inserted ‘‘tem-
  basis as other approved appraisers.                            porarily’’ after ‘‘order’’, ‘‘(i)’’ after ‘‘Administration
    (B) With respect to any employee of an ap-                   if’’, ‘‘(ii)’’ after ‘‘violations and’’, and ‘‘, and for not
  praisal company described in subparagraph (A)                  longer than 1 year. The Board may extend the suspen-
  who is offered an appraisal assignment in con-                 sion for an additional 6 months if it determines the ex-
                                                                 tension is in the public interest. If the Board and the
  nection with a mortgage under this sub-                        mortgagee agree, these time limits may be extended’’
  chapter, the person utilizing the appraiser                    after ‘‘6 months’’.
  may contract directly with the appraisal com-                     Subsec. (c)(6)(D). Pub. L. 102–550, § 519(1), struck out
  pany employing the appraiser for the fur-                      subpar. (D) which read as follows: ‘‘For purposes of this
  nishing of the appraisal services.                             paragraph, the term ‘mortgagee’ means a mortgagee, a
                                                                 branch office or subsidiary of a mortgagee, or a direc-
(June 27, 1934, ch. 847, title II, § 202, 48 Stat. 1248;         tor, officer, employee, agent, or other person partici-
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 10; June 3, 1939,            pating in the conduct of the affairs of such mortgagee.’’
ch. 175, § 5, 53 Stat. 805; Apr. 20, 1950, ch. 94, title            Subsec. (c)(7), (8). Pub. L. 102–550, § 519(2), added par.
I, § 122, 64 Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25,         (7) and redesignated former par. (7) as (8).
1967, 81 Stat. 17; Pub. L. 101–235, title I, § 142, Dec.            1990—Subsec. (e)(3), (4). Pub. L. 101–625 added pars. (3)
15, 1989, 103 Stat. 2030; Pub. L. 101–625, title III,            and (4).
§ 322, Nov. 28, 1990, 104 Stat. 4134; Pub. L. 102–550,              1989—Pub. L. 101–235 substituted ‘‘Federal Housing
                                                                 Administration operations’’ for ‘‘Mutual Mortgage In-
title V, §§ 502, 518, 519, Oct. 28, 1992, 106 Stat. 3778,        surance Fund’’ in section catchline, designated existing
3792; Pub. L. 105–65, title V, § 551, Oct. 27, 1997, 111         provisions as subsec. (a) and inserted heading, and
Stat. 1412; Pub. L. 106–377, § 1(a)(1) [title II,                added subsecs. (b) to (e).
§ 209(c)], Oct. 27, 2000, 114 Stat. 1441, 1441A–25.)                1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com-
                                                                 missioner’’ wherever appearing.
                   REFERENCES IN TEXT                               1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
  The Federal Advisory Committee Act, referred to in             for ‘‘Administrator’’ wherever appearing.
subsec. (b), is Pub. L. 92–463, Oct. 6, 1972, 86 Stat. 770, as      1939—Act June 3, 1939, substituted ‘‘created’’ for ‘‘cre-
amended, which is set out in the Appendix to Title 5,            ate’’.
Government Organization and Employees.                              1938—Act Feb. 3, 1938, inserted ‘‘with respect to mort-
  Section 3537b(c) of title 42, referred to in subsec.           gages insured under section 1709 of this title’’.
(b)(5), was in the original ‘‘section 112(c) of the Depart-
                                                                                      CHANGE OF NAME
ment of Housing and Urban Development Reform Act of
1989’’, meaning section 112 of Pub. L. 101–235, which does         Committee on Banking, Finance and Urban Affairs of
not contain a subsec. (c), but enacted section 13 of the         House of Representatives treated as referring to Com-
Department of Housing and Urban Development Act,                 mittee on Banking and Financial Services of House of
which was classified to section 3537b of title 42 prior to       Representatives by section 1(a) of Pub. L. 104–14, set
repeal by Pub. L. 104–65, § 11(b)(1), Dec. 19, 1995, 109 Stat.   out as a note preceding section 21 of Title 2, The Con-
§ 1709                              TITLE 12—BANKS AND BANKING                                   Page 540

gress. Committee on Banking and Financial Services of            (III) a mortgage for a property with an
House of Representatives abolished and replaced by             appraised value in excess of $125,000, 97.15
Committee on Financial Services of House of Rep-               percent of the appraised value of the
resentatives, and jurisdiction over matters relating to
                                                               property; or
securities and exchanges and insurance generally trans-
                                                                 (IV) notwithstanding subclauses (II)
ferred from Committee on Energy and Commerce of
House of Representatives by House Resolution No. 5,            and (III), a mortgage for a property with
One Hundred Seventh Congress, Jan. 3, 2001.                    an appraised value in excess of $50,000
                                                               that is located in an area of the State for
         SECTION REFERRED TO IN OTHER SECTIONS                 which the average closing cost exceeds
  This section is referred to in sections 1709, 1735,          2.10 percent of the average, for the State,
1735f–11, 1735f–14 of this title.                              of the sale price of properties located in
                                                               the State for which mortgages have been
§ 1709. Insurance of mortgages                                 executed, 97.75 percent of the appraised
(a) Authorization                                              value of the property.
  The Secretary is authorized, upon application           For purposes of the preceding sentence, the
by the mortgagee, to insure as hereinafter pro-           term ‘‘area’’ means a metropolitan statistical
vided any mortgage offered to him which is eli-           area as established by the Office of Manage-
gible for insurance as hereinafter provided, and,         ment and Budget; and the median 1-family
upon such terms as the Secretary may prescribe,           house price for an area shall be equal to the
to make commitments for the insuring of such              median 1-family house price of the county
mortgages prior to the date of their execution or         within the area that has the highest such me-
disbursement thereon.                                     dian price. For purposes of this paragraph, the
                                                          term ‘‘average closing cost’’ means, with re-
(b) Eligibility for insurance; mortgage limits            spect to a State, the average, for mortgages
  To be eligible for insurance under this section         executed for properties that are located within
a mortgage shall comply with the following:               the State, of the total amounts (as determined
    (1) Have been made to, and be held by, a              by the Secretary) of initial service charges,
  mortgagee approved by the Secretary as re-              appraisal, inspection, and other fees (as the
  sponsible and able to service the mortgage              Secretary shall approve) that are paid in con-
  properly.                                               nection with such mortgages. Notwithstanding
    (2) Involve a principal obligation (including         any other provision of this section, in any case
  such initial service charges, appraisal, inspec-        where the dwelling is not approved for mort-
  tion, and other fees as the Secretary shall ap-         gage insurance prior to the beginning of con-
  prove) in an amount—                                    struction, such mortgage shall not exceed 90
      (A) not to exceed the lesser of—                    per centum of the entire appraised value of the
        (i) in the case of a 1-family residence, 95       property as of the date the mortgage is accept-
      percent of the median 1-family house price          ed for insurance, unless (i) the dwelling was
      in the area, as determined by the Sec-              completed more than one year prior to the ap-
      retary; in the case of a 2-family residence,        plication for mortgage insurance, or (ii) the
      107 percent of such median price; in the            dwelling was approved for guaranty, insur-
      case of a 3-family residence, 130 percent of        ance, or a direct loan under chapter 37 of title
      such median price; or in the case of a 4-           38 prior to the beginning of construction, or
      family residence, 150 percent of such me-           (iii) the dwelling is covered by a consumer pro-
      dian price; or                                      tection or warranty plan acceptable to the
        (ii) 87 percent of the dollar amount limi-        Secretary and satisfies all requirements which
      tation determined under section 1454(a)(2)          would have been applicable if such dwelling
      of this title for a residence of the applica-       had been approved for mortgage insurance
      ble size; except that the dollar amount             prior to the beginning of construction. As used
      limitation in effect for any area under this        herein, the term ‘‘veteran’’ means any person
      subparagraph may not be less than the               who served on active duty in the armed forces
      greater of the dollar amount limitation in          of the United States for a period of not less
      effect under this section for the area on           than ninety days (or is certified by the Sec-
      October 21, 1998, or 48 percent of the dollar       retary of Defense as having performed extra-
      limitation      determined     under   section      hazardous service), and who was discharged or
      1454(a)(2) of this title for a residence of the     released therefrom under conditions other
      applicable size; and                                than dishonorable, except that persons enlist-
                                                          ing in the armed forces after September 7,
      (B) not to exceed an amount equal to the            1980, or entering active duty after October 16,
    sum of—                                               1981, shall have their eligibility determined in
        (i) the amount of the mortgage insur-             accordance with section 5303A(d) of title 38.
      ance premium paid at the time the mort-             Notwithstanding any other provision of this
      gage is insured; and                                paragraph, the amount which may be insured
        (ii) in the case of—                              under this section may be increased by up to
           (I) a mortgage for a property with an          20 percent if such increase is necessary to ac-
        appraised value equal to or less than             count for the increased cost of the residence
        $50,000, 98.75 percent of the appraised           due to the installation of a solar energy sys-
        value of the property;                            tem (as defined in subparagraph (3) of the last
           (II) a mortgage for a property with an         paragraph of section 1703(a) of this title)
        appraised value in excess of $50,000 but          therein.
        not in excess of $125,000, 97.65 percent of          Notwithstanding any other provision of this
        the appraised value of the property;              paragraph, the Secretary may not insure, or

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