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Title 12, Banks and BankingRelease 119-110

§2704 Insurance for Emergency Mortgage Loans and Advances

Title 12 › CHAPTER 28 — EMERGENCY MORTGAGE RELIEF › § 2704

Last updated Sep 22, 2026|Official source

Summary

The Secretary can insure emergency mortgage loans and advances made by approved financial institutions under terms the Secretary sets. Eligible lenders include banks, trust companies, finance and mortgage firms, savings and loan associations, insurance companies, credit unions, and other approved institutions. The Secretary may charge a premium, but it cannot be more than one-half of one percent (0.5%) per year of the outstanding loan principal. The total of insured loans and emergency mortgage relief payments under section 2705 cannot exceed $3,000,000,000. The Secretary may relax rules if following them would be unfair to a lender that mostly followed the rules in good faith. Insurance payments are final and cannot be challenged after two years from the date the Secretary certified the claim, unless there was fraud or the United States demanded repurchase before those two years passed. Insurance can be transferred to another approved lender if a loan is sold. The Secretary must create underwriting rules to decide who gets insurance or relief money based on how likely a borrower is to resume mortgage payments, as required by section 2702(5).

Full Legal Text

Title 12, §2704

Banks and Banking, Source: USLM XML via OLRC

(a)Institutions eligible
The Secretary is authorized, upon such terms and conditions as the Secretary may prescribe, to insure banks, trust companies, finance companies, mortgage companies, savings and loan associations, insurance companies, credit unions, and such other financial institutions, which the Secretary finds to be qualified by experience and facilities and approves as eligible for insurance, against losses which they may sustain as a result of emergency loans or advances of credit made in accordance with the provisions of section 2703 of this title and this section with respect to mortgages eligible for assistance under this chapter.
(b)Premium charge; amount
The Secretary is authorized to fix a premium charge or charges for the insurance granted under this section, but in the case of any loan or advance of credit, such charge or charges shall not exceed an amount equivalent to one-half of 1 per centum per annum of the principal obligation of such loan or advance of credit outstanding at any time.
(c)Waiver of compliance with rules and regulations; finality and incontestability of payment for loss; transfer of insurance
The Secretary is authorized and empowered to waive compliance with any rule or regulation prescribed by the Secretary for the purposes of this section if, in the Secretary’s judgment, the enforcement of such rule or regulation would impose an injustice upon an insured lending institution which has substantially complied with such regulations in good faith. Any payment for loss made to an insured financial institution under this section shall be final and incontestable after two years from the date the claim was certified for payment by the Secretary, in the absence of fraud or misrepresentation on the part of such institution unless a demand for repurchase of the obligation shall have been made on behalf of the United States prior to the expiration of such two-year period. The Secretary is authorized to transfer to any financial institution approved for insurance under this chapter any insurance in connection with any loan which may be sold to it by another insured financial institution.
(d)Maximum aggregate amount of loans and advances insured
The aggregate amount of loans and advances insured under this section and emergency mortgage relief payments made under section 2705 of this title shall not exceed $3,000,000,000.
(e)Underwriting guidelines and procedures
The Secretary shall establish underwriting guidelines or procedures to allocate amounts made available for loans and advances insured under this section and for emergency relief payments made under section 2705 of this title based on the likelihood that a mortgagor will be able to resume mortgage payments, pursuant to the requirement under section 2702(5) of this title.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Subsecs. (b) to (d). Pub. L. 111–203, § 1496(b)(3)(A), (C), redesignated subsecs. (c) to (e) as (b) to (d), respectively, and struck out former subsec. (b). Prior to amendment, text of subsec. (b) read as follows: “In no case shall the insurance granted by the Secretary under this section to any financial institution on loans and advances made by such financial institution for the purposes of this chapter exceed 40 per centum of the total amount of such loans and advances made by the institution, except that, with respect to any individual loan or advance of credit, the amount of any claim for loss on such individual loan or advance of credit paid by the Secretary under the provision of this section shall not exceed 90 per centum of such loss.” Subsec. (e). Pub. L. 111–203, § 1496(b)(3)(D), added subsec. (e). Former subsec. (e) redesignated (d). Pub. L. 111–203, § 1496(b)(3)(B), inserted “and emergency mortgage relief payments made under section 2705 of this title” after “insured under this section” and substituted “$3,000,000,000” for “$1,500,000,000 at any one time”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the date on which final

Regulations

implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such

Regulations

have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of Title 15, Commerce and Trade.

Reference

Citations & Metadata

Citation

12 U.S.C. § 2704

Title 12, Banks and Banking

Last Updated

Sep 22, 2026

Release point: 119-110