§1735f–19 — Title 12 Banks and Banking | U.S. Code

Summary

The Secretary may, when asked to take over an insured mortgage on a multifamily housing project or certain health care facilities (like nursing homes, hospitals, or group practice facilities), choose a cheaper option for the government. If the Secretary finds that paying part of the claim costs less than other reasonable ways to keep the housing low-income or keep the health care facility open, the Secretary can ask the lender to take a partial payment on the insured claim and change the mortgage terms to new ones the Secretary sets. Under the Multifamily Assisted Housing Reform and Affordability Act of 1997, the Secretary may also make a one-time, nondefault partial or full payment of a claim when restructuring mortgages under section 514, after a market-value review and restructuring allowed by section 517(a). If a partial payment is made, the borrower must agree to repay that amount to the Secretary and put a second mortgage on the property as security under terms the Secretary decides.

Title 12, §1735f–19

Banks and Banking — Source: USLM XML via OLRC

(a)Notwithstanding any other provision of law, if the Secretary is requested to accept assignment of a mortgage insured by the Secretary that covers a multifamily housing project (as such term is defined in section 1701z–11(b) of this title) or a health care facility (including a nursing home, intermediate care facility, or board and care home (as those terms are defined in section 1715w of this title), a hospital (as that term is defined in section 1715z–7 of this title), or a group practice facility (as that term is defined in section 1749aaa–5 of this title)) and the Secretary determines that partial payment would be less costly to the Federal Government than other reasonable alternatives for maintaining the low-income character of the project, or for keeping the health care facility operational to serve community needs, the Secretary may request the mortgagee, in lieu of assignment, to—

(1)accept partial payment of the claim under the mortgage insurance contract; and

(2)recast the mortgage, under such terms and conditions as the Secretary may determine.

(b)Notwithstanding any other provision of law, the Secretary, in connection with a mortgage restructuring under section 514 of the Multifamily Assisted Housing Reform and Affordability Act of 1997, may make a one time, nondefault partial or full payment of claim under one or more mortgage insurance contracts, which shall include a determination by the Secretary or the participating administrative entity, in accordance with the Multifamily Assisted Housing Reform and Affordability Act of 1997, of the market value of the project and a restructuring of the mortgage, under such terms and conditions as are permitted by section 517(a) of such Act.

(c)As a condition to a partial claim payment under this section, the mortgagor shall agree to repay to the Secretary the amount of such payment and such obligation shall be secured by a second mortgage on the property on such terms and conditions as the Secretary may determine.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (b), is title V of Pub. L. 105–65, Oct. 27, 1997, 111 Stat. 1384. section 514 and 517(a) of the Act are set out as a note under section 1437f of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see

Short Title

of 1997 Amendment note set out under section 1701 of this title and Tables.

Amendments

1999—Pub. L. 106–74, § 213(a)(1), substituted “defaulted mortgages and in connection with mortgage restructuring” for “multifamily housing projects and health care facilities” in section catchline. Subsec. (b). Pub. L. 106–74, § 213(a)(2), substituted “partial or full payment of claim under one or more mortgage insurance contracts” for “partial payment of the claim under the mortgage insurance contract”. 1997—Pub. L. 105–65, § 210(1), inserted “and health care facilities” after “housing projects” in section catchline. Subsec. (a). Pub. L. 105–65, § 523(b)(1), substituted “Defaulted mortgages” for “Authority” in heading. Pub. L. 105–65, § 210(2)(B), inserted “or for keeping the health care facility operational to serve community needs,” after “character of the project,” in introductory provisions. Pub. L. 105–65, § 210(2)(A), which directed the insertion, in introductory provisions, of “or a health care facility (including a nursing home, intermediate care facility, or board and care home (as those terms are defined in section 1715w of this title), a hospital (as that term is defined in section 1715z–7 of this title), or a group practice facility (as that term is defined in section 1749aaa–5 of this title))” after “section 1701z–11(b) of this title”, was executed by inserting the language after “section 1701z–11(b) of this title)” to reflect the probable intent of Congress. Subsecs. (b), (c). Pub. L. 105–65, § 523(b)(2), (3), added subsec. (b) and redesignated former subsec. (b) as (c).

§1735f–19 Partial payment of claims on defaulted mortgages and in connection with mortgage restructuring