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.
EFFECTIVE DATE OF REPEAL
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’’
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
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
(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
(3) DIRECT ENDORSEMENT PROGRAM.—
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
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