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Title 12 — Banks and BankingRelease 119-73not60

§1747a Eligibility for Insurance

Title 12 › Chapter 13— NATIONAL HOUSING › Subchapter VII— INSURANCE FOR INVESTMENTS IN RENTAL HOUSING FOR FAMILIES OF MODERATE INCOME › § 1747a

Last updated Apr 3, 2026|Official source

Summary

To get insurance, a project must prove two things. The Secretary must agree there is a need nearby for new rental homes at the rents planned, and the project must be financially sound with homes the Secretary finds acceptable in quality, design, size, and type. Once the Secretary signs an insurance contract, that contract proves the project and investor were eligible and cannot be challenged by the investor after signing, except for fraud or lying. After the project is finished, the investor must show it is free of liens and unpaid construction bills, except taxes and other liens the Secretary approves. Debentures paid from the project’s net income and insurance benefits are not treated as unpaid obligations.

Full Legal Text

Title 12, §1747a

Banks and Banking — Source: USLM XML via OLRC

(a)To be eligible for insurance under this subchapter, a project shall meet the following conditions:
(1)The Secretary shall be satisfied that there is, in the locality or metropolitan area of such project, a need for new rental dwellings at rents comparable to the rents proposed to be charged for the dwellings in such project.
(2)Such project shall be economically sound, and the dwellings in such project shall be acceptable to the Secretary as to quality, design, size, and type.
(b)Any insurance contract executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the project and the investor for such insurance, and the validity of any insurance contract so executed shall be incontestable in the hands of an investor from the date of the execution of such contract, except for fraud or misrepresentation on the part of such investor.
(c)After completion of the project the investor must establish in a manner satisfactory to the Secretary that the project is free and clear of liens and that there are no other outstanding unpaid obligations contracted in connection with the construction of the project, except taxes and such other liens and obligations as may be approved or prescribed by the Secretary. Debentures issued by the investor which are payable out of net income from the project and from the benefits of the insurance contract shall not be construed as “unpaid obligations” as such term is used in this subsection.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1967—Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing in subsecs. (a)(1), (2), (b), and (c). 1951—Subsec. (c). Act Sept. 1, 1951, added subsec. (c). 1950—Act Apr. 20, 1950, substituted “Commissioner” for “Administrator” wherever appearing.

Reference

Citations & Metadata

Citation

12 U.S.C. § 1747a

Title 12 — Banks and Banking

Last Updated

Apr 3, 2026

Release point: 119-73not60