12 U.S.C. § 1715x: Experimental housing…

Summary

Allows the Secretary to insure mortgages (including home improvement loans and construction advances) for homes and projects that use new housing technology or experimental neighborhood standards. The goal is to help lower housing costs and improve quality, livability, durability, or neighborhood design. The Secretary can insure these loans if the property is an acceptable risk while being tested, the testing will give useful information for improving housing or neighborhoods, and the loans meet this section’s rules and any extra conditions the Secretary sets. The Secretary can also insure loans for projects approved under section 1701z. Loans insured under this authority must meet the chapter’s other rules, but for new construction or repairs the Secretary can estimate replacement cost using similar conventional design instead of a normal appraisal or repair estimate. Limits that normally apply to non‑owner lenders can be waived by the Secretary. The Secretary can make contracts and spend funds needed to run the program, and may pay to fix defects tied to the new technology to protect occupants after insurance is in place. The Secretary can study and publish the data from these projects. Lenders get the same insurance benefits they would have gotten under the regular law that would have applied but for the experimental feature. If a loan defaults, the Secretary can pay in cash or debentures or buy the loan by paying the unpaid principal, interest, and approved advances; after purchase the lender has no further rights. Rules in sections 1710 and 1713 about debentures and lender rights apply, except references to the Mutual Mortgage Insurance Fund mean the General Insurance Fund, and references to section 1709 mean this section. If payment is made in cash, the Secretary must add an amount equal to the interest the debentures would have earned up to a date set by the Secretary’s rules.

Title 12, §1715x

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(a)Purpose; authorization

(1)In order to assist in lowering housing costs and improving housing standards, quality, livability, or durability or neighborhood design through the utilization of advanced housing technology, or experimental property standards, the Secretary is authorized to insure and to make commitments to insure, under this section, mortgages (including home improvement loans, and including advances on mortgages during construction) secured by properties including dwellings involving the utilization and testing of advanced technology in housing design, materials, or construction, or experimental property standards for neighborhood design if the Secretary determines that (A) the property is an acceptable risk, giving consideration to the need for testing advanced housing technology or experimental property standards, (B) the utilization and testing of the advanced technology or experimental property standards involved will provide data or experience which the Secretary deems to be significant in reducing housing costs or improving housing standards, quality, livability, or durability, or improving neighborhood design, and (C) the mortgages are eligible for insurance under the provisions of this section and under any further terms and conditions which may be prescribed by the Secretary to establish the acceptability of the mortgages for insurance.

(2)The Secretary is further authorized to insure and to make commitments to insure, under this section, mortgages (including advances on mortgages during construction) secured by properties in projects to be carried out in accordance with plans approved by the Secretary under section 1701z of this title.

(b)Eligibility for insurance; conditions; limits

To be eligible for insurance under this section, a mortgage shall meet the requirements of one of the other sections or subchapters of this chapter; except that, in lieu of determining the appraised value or the replacement cost of the property in cases involving new construction or the estimated cost of repair and rehabilitation or improvement in cases involving existing properties, the Secretary shall estimate the cost of replacing the property using comparable conventional design, materials, and construction, and any limitation upon the maximum mortgage amount available to a nonoccupant owner shall not, in the discretion of the Secretary, be applicable to mortgages insured under this section.

(c)Contracts, agreements, and financial undertakings with mortgagor (d) Investigations and analysis of data; publication and distribution of reports

The Secretary may enter into such contracts, agreements, and financial undertakings with the mortgagor and others as he deems necessary or desirable to carry out the purposes of this section, and may expend available funds for such purposes, including the correction (when he determines it necessary to protect the occupants), at any time subsequent to insurance of a mortgage, of defects or failures in the dwellings which the Secretary finds are caused by or related to the advanced housing technology utilized in their design or construction or experimental property standards. Any authority which the Secretary may exercise in connection with a mortgage, or property covered by a mortgage, insured under any other section of this subchapter (including payments to reduce rentals for, or to facilitate homeownership by, lower income families) may be exercised in connection with a mortgage, or property covered by a mortgage, meeting the requirements of such other section (except as specified in subsection (b)), which is insured under this section to the same extent and in the same manner as if the mortgage insured under this section was insured under such other section.

(e)Entitlement to insurance benefits

Any mortgagee or lender under a mortgage insured under subsection (b) shall be entitled to insurance benefits determined in the same manner as such benefits would be determined if such mortgage or loan were insured under the section or subchapter of this chapter for which it otherwise would have been eligible except for the experimental feature of the property involved.

(f)Defaults; payment in cash or debentures; acquisition of mortgage

Notwithstanding the provisions of subsection (e) of this section, in the case of default on any mortgage insured under this section, the Secretary in his discretion, in accordance with such regulations as he may prescribe, may make payments pursuant to such subsections in cash or in debentures (as provided in the mortgage insurance contract), or may acquire the mortgage loan and the security therefor upon payment to the mortgagee in cash or in debentures (as provided in the mortgage insurance contract) of a total amount equal to the unpaid principal balance of the loan plus any accrued interest and any advances approved by the Secretary made previously by the mortgagee under the provisions of the mortgage. After the acquisition of the mortgage by the Secretary the mortgagee shall have no further rights, liabilities, or obligations with respect to the mortgage. The appropriate provisions of section 1710 and 1713 of this title relating to the issuance of debentures shall apply with respect to debentures issued under this subsection, and the appropriate provisions of section 1710 and 1713 of this title relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect to the Secretary when he has acquired an insured mortgage under this subsection, in accordance with and subject to regulations (modifying such provisions to the extent necessary to render their application for such purposes appropriate and effective) which shall be prescribed by the Secretary, except that as applied to mortgages insured under this section (1) all references in section 1710 of this title to the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General Insurance Fund, and (2) all references in section 1710 of this title to section 1709 of this title shall be construed to refer to this section. If the insurance payment is made in cash, there shall be added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Secretary.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsecs. (b) and (e), 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. The General Insurance Fund, referred to in subsec. (f), was established by section 1735c of this title.

Amendments

1968—Subsec. (a). Pub. L. 90–448, § 108(f)(1), designated existing provision as par. (1), redesignated cls. (1), (2), and (3) as cls. (A), (B), and (C), respectively, and added par. (2). Subsec. (b). Pub. L. 90–448, § 309(1), substituted “one of the other sections or subchapters of this chapter” for “one of the other sections of this subchapter”. Subsec. (c). Pub. L. 90–448, § 108(f)(2), inserted sentence providing that any authority which the Secretary may exercise in connection with a mortgage, or property covered by a mortgage, insured under any other section of this subchapter (including payments to reduce rentals for, or to facilitate homeownership by, lower income families) may be exercised in connection with a mortgage, or property covered by a mortgage, meeting the requirements of such other section (except as specified in subsec. (b)), which is insured under this section to the same extent and in the same manner as if the mortgage insured under this section was insured under such other section. Subsec. (e). Pub. L. 90–448, § 309(2), substituted “the section or subchapter of this chapter” for “the section of this subchapter”. 1967—Subsecs. (a) to (d), (f). Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing. 1965—Subsec. (f). Pub. L. 89–117, § 1108(n)(1), (2), substituted “General Insurance Fund” for “Experimental Housing Insurance Fund” and struck out provision that all references in section 1713 of this title to the Housing Insurance Fund, the Housing Fund, or the Fund shall be construed to refer to the Experimental Housing Insurance Fund. Subsec. (g). Pub. L. 89–117, § 1108(n)(3), repealed subsec. (g) which created the Experimental Housing Insurance Fund, provided for transfer of funds thereto, and authorized the charging of expenses thereto. 1964—Subsec. (a). Pub. L. 88–560, § 118(a), substituted “home improvement loans, and including advances on mortgages” for “, in the case of mortgages insured under subsection (b)(2) of this section, advances on such mortgages”. Subsec. (b). Pub. L. 88–560, § 118(b), substituted provisions which make insurance available for mortgages meeting the requirements of any other sections of subchapter II of this chapter for provisions which made insurance available for mortgages meeting the requirements of section 1709(b) or 1713(b), (c) of this title and made the Commissioner’s estimate of replacement cost of the property applicable to mortgages meeting the requirements of any section of subchapter II of this chapter in lieu of determining the appraised value or the replacement cost of the property in new

Construction

or estimated cost of repair and rehabilitation or improvement for existing properties. Subsec. (e). Pub. L. 88–560, § 118(c), substituted provision for entitlement to insurance benefits determined in the same manner as such benefits would be determined if such mortgage or loan were insured under the section of this subchapter for which it otherwise would have been eligible except for the experimental feature of the property involved for former provision for entitlement to insurance benefits provided in section 1710(a) of this title. Subsec. (f). Pub. L. 88–560, §§ 105(c)(1), 118(c), (d), added to subsec. (g), redesignated (f), provision that “If the insurance payment is made in cash, there shall be added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to

Regulations

issued by the Commissioner”, deleted former provisions of subsec. (f) which related to entitlement to insurance benefits provided in section 1713(g) of this title, now covered by subsec. (e) of this section, and redesignated former subsec. (g) as (f), substituting in first sentence “subsection (e)” for “subsections (e) and (f)”, respectively. Subsecs. (g), (h). Pub. L. 88–560, § 118(d), redesignated subsec. (h) as (g). Former subsec. (g) redesignated (f).

§1715x Experimental Housing Insurance