§1715z–14 — Title 12 Banks and Banking | U.S. Code

Summary

Creates a demonstration mortgage risk-sharing program to test whether the Department can share mortgage risk with private mortgage insurers and with insured community development financial institutions. The goal is to lower Government risk and admin costs and speed mortgage processing. The Secretary must limit the demo to no more than four HUD administrative regions. The program must be in the financial interest of the Government and must not cause HUD employees to lose their jobs before the end of the 5-year period that began on December 21, 2000. In any region, the number of mortgages with shared risk in a fiscal year cannot be more than 20 percent of the mortgages and loans the Secretary insured in that region in the previous fiscal year. Under the program, the Secretary may make contracts with qualified private mortgage insurers and with insured community development financial institutions to insure one- to four-family dwellings. Those contracts must make the private insurer or insured CDFI take a secondary share of losses (the contract sets the percentage; the Secretary takes the first share). Contracts may let them handle or delegate underwriting, credit approval, appraisal, inspection, commitments, claims, property disposition, and other approved mortgage tasks. Contracts must set rules for splitting premiums, keeping loss reserves, calculating claims, foreclosures, handling property, assignee rights, and similar matters. Participating insurers or insured CDFIs must endorse loans for risk-sharing and act for the Secretary as authorized. An “insured community development financial institution” is a community development financial institution that is an insured depository institution or an insured credit union.

Title 12, §1715z–14

Banks and Banking — Source: USLM XML via OLRC

(a)The purpose of this section is to authorize a demonstration mortgage risk-sharing program designed to test the feasibility of entering into risk-sharing contracts with private mortgage insurers and with insured community development financial institutions in order to reduce Government risk and administrative costs, and to speed mortgage processing. The Secretary shall limit the demonstration under this section to not more than four administrative regions of the Department of Housing and Urban Development, and shall assure that the program is in the financial interest of the Government and will not result in loss of employment by any employees of the Department of Housing and Urban Development before the expiration of the 5-year period beginning on December 21, 2000. The aggregate number of mortgages for which risk of nonpayment is shared under this section in any administrative region of the Department of Housing and Urban Development in any fiscal year may not exceed 20 percent of the aggregate number of mortgages and loans insured by the Secretary under this subchapter in such region during the preceding fiscal year.

(b)Notwithstanding any other provision of this chapter inconsistent with this section, the Secretary is authorized, in providing mortgage insurance with respect to one- to four-family dwellings under section 1709(b), 1715y, and 1715z–10 11 See References in Text note below. of this title, to enter into risk-sharing contracts with private mortgage insurance companies which have been determined to be qualified insurers under section 1717(b)(2)(C) of this title and with insured community development financial institutions. Such contracts shall require private mortgage insurance companies and insured community development financial institutions to—

(1)assume a secondary percentage of loss on any mortgage insured pursuant to section 1709(b), 1715y, or 1715z–10 of this title covering a one- to four-family dwelling, which percentage of loss shall be set forth in the risk-sharing contract, with the first percentage of loss to be borne by the Secretary; 22 So in original. Probably should be followed by “and”.

(2)perform or delegate underwriting, credit approval, appraisal, inspection, commitment, claims processing, property disposition, or other functions as the Secretary shall approve as consistent with the purposes of this section and shall set forth in the risk-sharing contract.

(c)Any contract for risk-sharing under this section shall contain such provisions relating to the sharing of premiums received by the Secretary with a private mortgage insurer or insured community development financial institution on a sound actuarial basis, establishment of loss reserves, manner of calculating claims on such risk-sharing contract, conditions with respect to foreclosure, handling and disposition of property prior to claim or settlement, rights of assignees, and other similar matters as the Secretary may prescribe pursuant to regulations. Pursuant to a contract under this section, a private mortgage insurance company or insured community development financial institution shall endorse loans for risk-sharing and take such other actions on behalf of the Secretary and in the Secretary’s name as the Secretary may authorize.

(d)The Secretary shall require any private mortgage insurance company or insured community development financial institution participating in the program under this section to provide risk-sharing for those mortgages offered by the Secretary for inclusion in the program.

(e)For purposes of this section, the term “insured community development financial institution” means a community development financial institution, as such term is defined in section 4702 of this title that is an insured depository institution (as such term is defined in section 1813 of this title) or an insured credit union (as such term is defined in section 1752 of this title).

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1715z–10 of this title, referred to in subsec. (b), was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(7), July 30, 2008, 122 Stat. 2835.

Amendments

2000—Pub. L. 106–554, § 1(a)(7) [title I, § 143(1)], substituted “Risk-sharing demonstration” for “Reinsurance contracts” in section catchline. Subsec. (a). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2), (3)], in heading and first sentence substituted “risk-sharing” for “reinsurance” wherever appearing, in first sentence inserted “and with insured community development financial institutions” after “private mortgage insurers”, in second sentence substituted “four administrative regions” for “two administrative regions” and “the expiration of the 5-year period beginning on

December 21, 2000” for “

March 15, 1988”, and in last sentence substituted “mortgages for which risk of nonpayment is shared” for “mortgages insured” and “20 percent” for “10 percent”. Subsec. (b). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2), (4)(A), (B)], in first sentence of introductory provisions, substituted “, in providing” for “to provide”, “, to enter into” for “through” and “risk-sharing” for “reinsurance” and inserted “and with insured community development financial institutions” before period at end and, in second sentence of introductory provisions, inserted “and insured community development financial institutions” after “private mortgage insurance companies”. Subsec. (b)(1). Pub. L. 106–554, § 1(a)(7) [title I, § 143(4)(C)], added par. (1) and struck out former par. (1) which read as follows: “assume a percentage of loss on any mortgage insured pursuant to section 1709(b), 1715y, or 1715z–10 of this title covering a one- to four-family dwelling, which percentage of loss shall be set forth in the risk-sharing contract; and”. Pub. L. 106–554, § 1(a)(7) [title I, § 143(2)], substituted “risk-sharing” for “reinsurance”. Subsec. (b)(2). Pub. L. 106–554, § 1(a)(7) [title I, § 143(4)(D)], substituted “perform or delegate underwriting,” for “carry out (under appropriate delegation) such” and “functions as the Secretary” for “function as the Secretary pursuant to

Regulations

,” and inserted before period at end “and shall set forth in the risk-sharing contract”. Subsec. (c). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2), (5)], in first sentence, substituted “contract for” for “contract of” and “risk-sharing” for “reinsurance”, inserted “received by the Secretary with a private mortgage insurer or insured community development financial institution” after “sharing of premiums”, substituted “loss reserves” for “insurance reserves”, “such risk-sharing contract” for “such insurance”, and “rights of assignees” for “right of assignees” and, in second sentence, inserted “or insured community development financial institution” after “private mortgage insurance company” and substituted “loans for risk-sharing” for “loans for insurance”. Subsec. (d). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2), (6)], inserted “or insured community development financial institution” after “private mortgage insurance company” and substituted “risk-sharing” for “reinsurance”. Subsec. (e). Pub. L. 106–554, § 1(a)(7) [title I, § 143(7)], added subsec. (e). 1987—Subsec. (a). Pub. L. 100–200 substituted “

March 15, 1988” for “

December 16, 1987”. Pub. L. 100–179 substituted “

December 16, 1987” for “

December 2, 1987”. Pub. L. 100–170 substituted “

December 2, 1987” for “

November 15, 1987”. Pub. L. 100–154 substituted “

November 15, 1987” for “

October 31, 1987”. Pub. L. 100–122 substituted “

October 31, 1987” for “

September 30, 1987”. 1986—Subsec. (a). Pub. L. 99–430 substituted “

September 30, 1987” for “

September 30, 1986”. Pub. L. 99–345 substituted “

September 30, 1986” for “

June 6, 1986”. Pub. L. 99–289 substituted “

June 6, 1986” for “

April 30, 1986”. Pub. L. 99–272 made amendment identical to Pub. L. 99–219. See 1985 Amendment note below. Pub. L. 99–267 substituted “

April 30, 1986” for “

March 17, 1986”. 1985—Subsec. (a). Pub. L. 99–219 substituted “

March 17, 1986” for “

December 15, 1985”. Pub. L. 99–156 substituted “

December 15, 1985” for “

November 14, 1985”. Pub. L. 99–120 substituted “

November 14, 1985” for “

September 30, 1985”.

Statutory Notes and Related Subsidiaries

Evaluation of Reinsurance Program; Report to Congress Pub. L. 98–181, title I [title IV, § 428(b)], Nov. 30, 1983, 97 Stat. 1219, provided that: “The Secretary of Housing and Urban Development shall evaluate the reinsurance program under section 249 of the National Housing Act [this section] and, not later than March 1, 1985, submit to the Congress a report setting forth the results of such evaluation. Such report shall include an evaluation of the possible effect of a reinsurance program on the characteristics of the pool of mortgages remaining wholly under the applicable insurance funds and the actuarial soundness of such funds under such conditions.”

§1715z–14 Risk-sharing demonstration