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Title 42 — The Public Health and WelfareRelease 119-73not60

§1475 Loan Payment Moratorium and Foreclosure Procedures

Title 42 › Chapter 8A— SLUM CLEARANCE, URBAN RENEWAL, AND FARM HOUSING › Subchapter III— FARM HOUSING › § 1475

Last updated Apr 5, 2026|Official source

Summary

The Secretary can pause payments of interest and principal on a loan while it is still unpaid, using rules he makes. A borrower must show they cannot pay because of events beyond their control and that paying now would seriously hurt their standard of living. In extreme hardship, the Secretary may cancel interest that became due during the pause. If the property is later taken back, the borrower cannot be sued for any remaining debt if they tried in good faith to pay. When taking back property for an unpaid loan, the Secretary must follow the State’s foreclosure rules if those rules are more favorable to the borrower. That only applies if Congress has approved any extra funds needed.

Full Legal Text

Title 42, §1475

The Public Health and Welfare — Source: USLM XML via OLRC

(a)During any time that any such loan is outstanding, the Secretary is authorized under regulations to be prescribed by him to grant a moratorium upon the payment of interest and principal on such loan for so long a period as he deems necessary, upon a showing by the borrower that due to circumstances beyond his control, he is unable to continue making payments of such principal and interest when due without unduly impairing his standard of living. In cases of extreme hardship under the foregoing circumstances, the Secretary is further authorized to cancel interest due and payable on such loans during the moratorium. Should any foreclosure of such a mortgage securing such a loan upon which a moratorium has been granted occur, no deficiency judgment shall be taken against the mortgagor if he shall have faithfully tried to meet his obligation.
(b)In foreclosing on any mortgage held by the Secretary under this subchapter, the Secretary shall follow the foreclosure procedures of the State in which the property involved is located to the extent such procedures are more favorable to the borrower than the foreclosure procedures that would otherwise be followed by the Secretary. This subsection shall be subject to the availability of amounts approved in appropriations Acts, to the extent additional budget authority is necessary to carry out this subsection.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1990—Pub. L. 101–625 amended section catchline generally, designated existing provisions as subsec. (a) and inserted heading, and added subsec. (b).

Reference

Citations & Metadata

Citation

42 U.S.C. § 1475

Title 42 — The Public Health and Welfare

Last Updated

Apr 5, 2026

Release point: 119-73not60