§1715o — Title 12 Banks and Banking | U.S. Code

Summary

Debentures for loans or mortgages insured on or after thirty days following August 2, 1954 (except those under paragraph (4) of 1715l(g)) must carry the highest interest rate among these dates: the rate when the commitment to insure was issued, the rate when the loan or mortgage was endorsed for insurance, or if there were multiple endorsements, the rate on the first endorsement. Debentures under sections 1715k(f), 1715k(h)(7), 1715l(g), 1715x, or 1715z–3 may instead use the rate in effect on the date they are issued, if the Secretary chooses. The Secretary sets the interest rate from time to time with the Treasury Secretary’s approval. The rate cannot exceed an annual rate the Treasury Secretary figures by estimating the average yield to maturity during the prior calendar month on all marketable U.S. obligations maturing 15 years or more, and then rounding to the nearest one-eighth of 1 percent. If a cash insurance claim is paid for a mortgage insured under 1709 or 1715y and endorsed after January 23, 2004, the rate used to calculate that claim is the monthly average yield for the month the default happened on U.S. Treasury securities adjusted to a 10-year constant maturity.

Title 12, §1715o

Banks and Banking — Source: USLM XML via OLRC

Notwithstanding any other provisions of this chapter, debentures issued under any section of this chapter with respect to a loan or mortgage accepted for insurance on or after thirty days following August 2, 1954 (except debentures issued pursuant to paragraph (4) of section 1715l(g) of this title) shall bear interest at the rate in effect on the date the commitment to insure the loan or mortgage was issued, or the date the loan or mortgage was endorsed for insurance, or (when there are two or more insurance endorsements) the date the loan or mortgage was initially endorsed for insurance, whichever rate is the highest, except that debentures issued pursuant to section 1715k(f), 1715k(h)(7), 1715l(g), 1715x, or 1715z–3 of this title may, at the discretion of the Secretary, bear interest at the rate in effect on the date they are issued. The Secretary shall from time to time, with the approval of the Secretary of the Treasury, establish such interest rate in an amount not in excess of the annual rate of interest determined by the Secretary of the Treasury, at the request of the Secretary, by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the calendar month next preceding the establishment of such rate of interest, on all outstanding marketable obligations of the United States having a maturity date of fifteen years or more from the first day of such next preceding month, and by adjusting such estimated average annual yield to the nearest one-eighth of 1 per centum. Notwithstanding the preceding sentence and the following paragraph,11 So in original. if an insurance claim is paid in cash for any mortgage that is insured under section 1709 or 1715y of this title and is endorsed for mortgage insurance after January 23, 2004, the debenture interest rate for purposes of calculating such a claim shall be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in text, was in the original “this Act”, meaning act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.

Amendments

2004—Pub. L. 108–199, which directed amendment of section by adding sentence relating to interest rate for claim paid in cash at end of first paragraph, was executed by adding sentence at end of section to reflect the probable intent of Congress. 1968—Pub. L. 90–448 included debentures issued pursuant to section 1715z–3 of this title. 1967—Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing. 1961—Pub. L. 87–70 changed the date for determination of the rate of interest for debentures, other than those issued pursuant to section 1715k(f), 1715k(h)(7), 1715l(g), 1715l(g)(4), or 1715x, from the rate in effect on the date the debentures are issued to the rate in effect on the date the commitment to insure the loan or mortgage was issued, or the date the loan or mortgage was endorsed for insurance, or (when there are two or more insurance endorsements) the date the loan or mortgage was initially endorsed for insurance, whichever rate is highest.

§1715o Interest Rate on Debentures; Method of Establishment