§1715z–11 — Title 12 Banks and Banking | U.S. Code

Summary

When the Secretary sells a multifamily housing project taken back after a mortgage default to a nonprofit cooperative that limits permanent residents to members, or to a nonprofit consumer cooperative, the Secretary can accept a mortgage from the buyer or, if the lender asks, insure that mortgage. The loan amount must match the property’s purchase value based on what the building can pay from nonprofit income after expenses, taxes, and required reserves. The Secretary can also add up to the full amount of prepaid costs needed to create the cooperative or use other reasonable ways to cover those costs. Before the sale, the Secretary may spend money on needed repairs and improvements.

Title 12, §1715z–11

Banks and Banking — Source: USLM XML via OLRC

In any case which the Secretary sells a multifamily housing project acquired as the result of a default on a mortgage which was insured under this chapter to a cooperative which will operate it on a nonprofit basis and restrict permanent occupancy of its dwellings to members, or to a nonprofit corporation which operates as a consumer cooperative as defined by the Secretary, the Secretary may accept a purchase money mortgage, or upon application of the mortgagee, insure a mortgage under this section upon such terms and conditions as the Secretary determines are reasonable and appropriate, in a principal amount equal to the value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service can be met from the income of property when operated on a nonprofit basis after payment of all operating expenses, taxes, and required reserves; except that the Secretary may add to the mortgage amount an amount not greater than the amount of prepaid expenses and costs involved in achieving cooperative ownership, or make such other provisions for payment of such expenses and costs as the Secretary deems reasonable and appropriate. Prior to such disposition of a project, funds may be expended by the Secretary for necessary repairs and improvements.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1978—Pub. L. 95–557 inserted “or to a nonprofit corporation which operates as a consumer cooperative as defined by the Secretary” after “dwellings to members” and “or upon application of the mortgagee, insure a mortgage under this section upon such terms and conditions as the Secretary determines are reasonable and appropriate” after “purchase money mortgage” and substituted “the value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service can be met from the income of property when operated on a nonprofit basis after payment of all operating expenses, taxes, and required reserves; except that the Secretary may add to the mortgage amount an amount not greater than the amount of prepaid expenses and costs involved in achieving cooperative ownership, or make such other provision for payment of such expenses and costs as the Secretary deems reasonable and appropriate” for “the sum of (1) the appraised value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service can be met from the income of the property when operated on a nonprofit basis and after payment of all operating expenses, taxes and required reserves, and (2) the amount of prepaid expenses and costs involved in achieving cooperative ownership”.

§1715z–11 Sale to cooperatives of multifamily housing projects acquired by Secretary; acceptance of purchase money mortgage for sale or insurance of mortgage; principal amount of mortgage; expenditures for repairs, etc., prior to sale

Summary

Title 12, §1715z–11

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata