PRIA, Government Policy, Made Personal

Summary

The Secretary may insure money advanced under an “open-end” mortgage for repairs or improvements to a home with up to four families. The Secretary will set the rules and may charge fees for that insurance. Only advances that clearly protect or improve the home’s livability or usefulness can be insured. An advance cannot be insured if it would make the mortgage balance exceed the original principal unless the borrower says the money will add rooms or other enclosed space. The added advance can be counted when figuring the mortgage value for debentures and certificates of claim, and these advances do not count toward the chapter’s overall limit on insured mortgage principal. Open-end mortgage: a loan that allows later advances.

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