PRIA, Government Policy, Made Personal

Summary

Allows state constitutional or statutory caps on interest to be ignored for certain loans. That includes loans or mortgages on one- to four-family dwellings that are insured under Title I or II of the National Housing Act (12 U.S.C. 1702 et seq. or 1707 et seq.) or insured, guaranteed, or made under chapter 37 of title 38, and it also covers temporary construction or interim loans when, at the time they are made, there is a declared intent to get permanent financing mainly by those insured or guaranteed loans. These rules apply in any State until a state law limiting interest on those kinds of loans becomes effective after June 30, 1976.

Title 12, §1709–1a

Banks and Banking, Source: USLM XML via OLRC

(a)The provisions of the constitution of any State expressly limiting the amount of interest which may be charged, taken, received, or reserved by certain classes of lenders and the provisions of any law of that State expressly limiting the amount of interest which may be charged, taken, received, or reserved shall not apply to—

(1)any loan or mortgage which is secured by a one- to four-family dwelling and which is (A) insured under title I or II [12 U.S.C. 1702 et seq. or 1707 et seq.] of the National Housing Act, or (B) insured, guaranteed, or made under chapter 37 of title 38; or

(2)any temporary construction loan or other interim financing if at the time such loan is made or financing is arranged, the intention to obtain permanent financing substantially by means of loans or mortgages so insured, guaranteed, or made is declared.

(b)The provisions of this section shall apply to such loans, mortgages, or other interim financing made or executed in any State until the effective date (after June 30, 1976) of a provision of law of that State limiting the amount of interest which may be charged, taken, received, or reserved on such loans, mortgages, or financing.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The National Housing Act, referred to in subsec. (a)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246. Titles I and II of the National Housing Act are classified generally to subchapters I (§ 1702 et seq.) and II (§ 1707 et seq.), respectively, of this chapter. For complete classification of this Act to the Code, see section 1701 of this title and Tables. Codification Section was enacted as part of the Veterans Housing

Amendments

Act of 1976, and not as part of the National Housing Act which comprises this chapter.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective June 30, 1976, see section 9(a) of Pub. L. 94–324, set out as a note under section 3701 of Title 38, Veterans’ Benefits.

§1709–1a State Constitutional and Legal Limits Upon Interest Chargeable on Loans, Mortgages, or Other Interim Financing Arrangements; Applicability; Covered Arrangements