Title 12, Banks and BankingRelease 119-110
§1709–2 Equity Skimming; Penalty; Persons Liable; One Dwelling Exemption
Title 12 › CHAPTER 13 — NATIONAL HOUSING › SUBCHAPTER II — MORTGAGE INSURANCE › § 1709–2
Summary
Anyone who, with intent to defraud, repeatedly buys 1- to 4-family homes in default at purchase or that go into default within one year, where the loan is HUD-held/insured or guaranteed or made by the VA, then fails to pay mortgage and keeps the rent, can be fined up to $250,000, jailed up to 5 years, or both. It applies to purchasers, beneficial owners, officers, directors, or agents, but not one who buys only one such dwelling.
Full Legal Text
Title 12, §1709–2
Banks and Banking, Source: USLM XML via OLRC
Whoever, with intent to defraud, willfully engages in a pattern or practice of— (1)
(2)failing to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan, and
(3)applying or authorizing the application of rents from such dwellings for his own use,
shall be fined not more than $250,000 or imprisoned not more than 5 years, or both. This section shall apply to a purchaser of such a dwelling, or a beneficial owner under any business organization or trust purchasing such dwelling, or to an officer, director, or agent of any such purchaser. Nothing in this section shall apply to the purchaser of only one such dwelling.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Codification Section was enacted as part of the Housing and Urban Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
Amendments
1991—Par. (1). Pub. L. 102–54 substituted “Department of Veterans Affairs” for “Veterans’ Administration” in two places. 1988—Pub. L. 100–242 inserted parenthetical reference to condominiums and cooperatives in par. (1), substituted “due, regardless of whether the purchaser is obligated on the loan” for “due” in par. (2), and substituted “$250,000” for “$5,000” and “5” for “three” in closing provisions.
Reference
Citations & Metadata
Citation
12 U.S.C. § 1709–2
Title 12, Banks and Banking
Last Updated
Sep 22, 2026
Release point: 119-110