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

Summary

Lets the Secretary insure extra advances made under an open-end mortgage for repair or improvement of a home that has no more than four family units. The Secretary may set the rules and can add the advance amount to the original loan balance when figuring how much the lender can get in debentures and certificates of claim. The Secretary may charge fees, including amounts like insurance premiums. Only advances that clearly protect or improve the home’s basic livability or usefulness qualify. An advance won’t be insured if it plus the unpaid loan balance would go past the original loan amount, unless the borrower signs a statement saying the money will pay to build additional rooms or other enclosed space as part of the dwelling. These open-end advances do not count toward the law’s overall limit on insured mortgage amounts.

Title 12, §1715p

Banks and Banking — Source: USLM XML via OLRC

Notwithstanding any other provisions of this chapter, in connection with any mortgage insured pursuant to any section of this chapter which covers a property upon which there is located a dwelling designed principally for residential use for not more than four families in the aggregate, the Secretary is authorized, upon such terms and conditions as he may prescribe, to insure under said section the amount of any advance for the improvement or repair of such property made to the mortgagor pursuant to an “open-end” provision in the mortgage, and to add the amount of such advance to the original principal obligation in determining the value of the mortgage for the purpose of computing the amounts of debentures and certificate of claim to which the mortgagee may be entitled: Provided, That the Secretary may require the payment of such charges, including charges in lieu of insurance premiums, as he may consider appropriate for the insurance of such “open-end” advances: Provided, further, That only advances for such improvements or repairs as substantially protect or improve the basic livability or utility of the property involved shall be eligible for insurance under this section; Provided further, That no such advance shall be insured under this section if the amount thereof plus the amount of the unpaid balance of the original principal obligation of the mortgage would exceed the amount of such original principal obligation unless the mortgagor certifies that the proceeds of such advance will be used to finance the construction of additional rooms or other enclosed space as a part of the dwelling: And provided further, That the insurance of “open-end” advances shall not be taken into account in determining the aggregate amount of principal obligations of mortgages which may be insured under this chapter.

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

1967—Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing.

§1715p Insurance of Advances Under Open-end Mortgages; Payment of Charges; Eligibility and Conditions