12 USC 1715z-9 - Co-insurance of eligible mortgage, advance, or loan

U.S Code last checked for updates: Nov 22, 2024

§ 1715z–9.

Co-insurance of eligible mortgage, advance, or loan

(a)

Authority of Secretary; request of mortgagee; premium charges; provisions of contract of co-insurance; non-applicability of state insurance laws

In addition to providing insurance as otherwise authorized under this chapter, and notwithstanding any other provision of this chapter inconsistent with this section, the Secretary, upon request of any mortgagee and for such mortgage insurance premium as he may prescribe (which premium, or other charges to be paid by the mortgagor, shall not exceed the premium, or other charges, that would otherwise be app

(1)

assume a percentage of any loss on the insured mortgage, advance, or loan in direct proportion to the amount of the co-insurance, which co-insurance shall not be less than 10 per centum, subject to any reasonable limit or limits on the liability of the mortgagee that may be specified in the event of unusual or catastrophic losses that may be incurred by any one mortgagee; and

(2)

carry out (under a delegation or otherwise and with or without compensation but subject to audit, exception, or review requirements) such credit approval, appraisal, inspection, commitment, property disposition, or other functions as the Secretary, pursuant to regulations, shall approve as consistent with the purposes of this chapter.

Any contract of co-insurance under this section shall contain such provisions relating to the sharing of premiums on a sound actuarial basis, establishment of mortgage reserves, manner of calculating insurance benefits, conditions with respect to foreclosure, handling and disposition of property prior to claim or settlement, rights of assignees (which may elect not to be subject to the loss sharing provisions), and other similar matters as the Secretary may prescribe pursuant to regulations. A mortgagee which enters into a contract of co-insurance under this section shall not by reason of such contract, or its adherence to such contract or applicable regulations of the Secretary, including provisions relating to the retention of risks in the event of sale or assignment of a mortgage, be made subject to any State law regulating the business of insurance.

(b)

Inspection of construction of dwellings or projects as prerequisite; minimum standards or criteria applicable

(c)

Repealed. Pub. L. 100–242, title IV, § 414(a), Feb. 5, 1988, 101 Stat. 1907

(d)

Repealed. Pub. L. 100–242, title IV, § 401(a)(3), Feb. 5, 1988, 101 Stat. 1898

(e)

Availability unaffecting insurance otherwise authorized; criteria for exercise of authority by Secretary

(f)

Multifamily housing project; contract provisions; aggregate principal amount of all mortgages insured; loans on defaulted mortgages; insurance for state assisted projects and projects under construction; definitions; amount of reserves

(1)

Where the mortgage covers a multifamily housing project, the co-insurance contract may provide that the mortgagee assume (i) the full amount of any loss on the insured mortgage up to an amount equal to a fixed percentage of the outstanding principal balance of the mortgage at the time of claim for insurance benefits, or (ii) the full amount of any losses on insured mortgages in a portfolio of mortgages approved by the Secretary up to an amount equal to a fixed percentage of the outstanding principal balance of all mortgages in such portfolio at the time of claim for insurance benefits on a mortgage in the portfolio, plus a share of any loss in excess of the amount under clause (i) or (ii), whichever is applicable.

(2)

The Secretary may make loans, from the applicable insurance fund, to public housing agencies in connection with mortgages which have been insured pursuant to this subsection and which are in default.

(3)

The Secretary may insure and make a commitment to insure in connection with a co-insurance contract pursuant to this subsection (A) a mortgage on a project assisted under the second proviso in the first sentence of section 1715z–1(b) of this title, and (B) a mortgage or advance on a mortgage made to a public housing agency on a project under construction which is not approved for insurance prior to construction.

(4)

As used in this subsection, the term “public housing agency” has the meaning given such term in section 1437a(b)(6) of title 42.

(5)

Notwithstanding any other provision of this chapter, the Secretary may include in the determination of replacement cost of a project to be covered by a mortgage made to a public housing agency and insured pursuant to this subsection, such reserves and development costs, not to exceed 5 per centum of the amount otherwise allowable, as may be established or authorized by the public housing agency consistent with such agency’s procedures and underwriting standards.

(g)

Redesignated (f)

(h)

Acceptable co-insurance provisions for rental rehabilitation; termination date

Notwithstanding any other provision of this section, in the case of a mortgage insured under section 1715n(f) of this title secured by property which is to be rehabilitated or developed under section 1437o 1

 See References in Text note below.

of title 42, such co-insurance may include provisions that—

(1)

insurance benefits shall equal the sum of (A) 90 per centum of the mortgage on the date of institution of foreclosure proceedings (or on the date of acquisition of the property otherwise after default), and (B) 90 per centum of interest arrears on the date benefits are paid;

(2)

the mortgagee shall remit to the Secretary, for credit to the General Insurance Fund, 90 per centum of any proceeds of the property, including sale proceeds, net of the mortgagee’s actual and reasonable costs related to the property and the enforcement of security;

(3)

payment of such benefits shall be made in cash unless the mortgagee submits a written request for debenture payment; and

(4)

the underwriter of co-insurance may reinsure 10 per centum of the mortgage amount with a private mortgage insurance company or with a State mortgage insurance agency.

(i)

 So in original. Two subsecs. (i) have been enacted.

Authority of mortgagee to assign its interest in any note or mortgage subject to a contract of co-insurance; terms and conditions respecting retention of co-insurance risk of such note or mortgage

(i)

 ² Annual review of, and assessment of compliance with, requirements; report; adjustment of requirements

(June 27, 1934, ch. 847, title II, § 244, as added Pub. L. 93–383, title III, § 307, Aug. 22, 1974, 88 Stat. 679; amended Pub. L. 94–375, § 6, Aug. 3, 1976, 90 Stat. 1070; Pub. L. 95–60, § 1(d), June 30, 1977, 91 Stat. 257; Pub. L. 95–80, § 1(d), July 31, 1977, 91 Stat. 339; Pub. L. 95–128, title III, § 301(f), Oct. 12, 1977, 91 Stat. 1131; Pub. L. 95–406, § 1(f), Sept. 30, 1978, 92 Stat. 879; Pub. L. 95–557, title III, § 301(f), Oct. 31, 1978, 92 Stat. 2096; Pub. L. 96–71, § 1(f), Sept. 28, 1979, 93 Stat. 501; Pub. L. 96–105, § 1(f), Nov. 8, 1979, 93 Stat. 794; Pub. L. 96–153, title III, § 301(f), Dec. 21, 1979, 93 Stat. 1111; Pub. L. 96–372, § 1(f), Oct. 3, 1980, 94 Stat. 1363; Pub. L. 96–399, title III, § 301(f), Oct. 8, 1980, 94 Stat. 1638; Pub. L. 96–470, title I, § 107(a), Oct. 19, 1980, 94 Stat. 2238; Pub. L. 97–35, title III, § 331(f), Aug. 13, 1981, 95 Stat. 413; Pub. L. 97–289, § 1(f), Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35, § 1(f), May 26, 1983, 97 Stat. 197; Pub. L. 98–109, § 1(f), Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181, title I [title III, § 303(a), title IV, §§ 401(e), 434], Nov. 30, 1983, 97 Stat. 1206, 1207, 1222; Pub. L. 98–479, title I, § 104(a)(5), Oct. 17, 1984, 98 Stat. 2225; Pub. L. 99–120, § 1(e), Oct. 8, 1985, 99 Stat. 502; Pub. L. 99–156, § 1(e), Nov. 15, 1985, 99 Stat. 815; Pub. L. 99–219, § 1(e), Dec. 26, 1985, 99 Stat. 1730; Pub. L. 99–267, § 1(e), Mar. 27, 1986, 100 Stat. 73; Pub. L. 99–272, title III, § 3007(e), Apr. 7, 1986, 100 Stat. 105; Pub. L. 99–289, § 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345, § 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30, 1987, 101 Stat. 793; Pub. L. 100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100–170, Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat. 1327; Pub. L. 100–242, title IV, §§ 401(a)(3), 414, 429(g), Feb. 5, 1988, 101 Stat. 1898, 1907, 1919; Pub. L. 101–235, title I, § 139(a), Dec. 15, 1989, 103 Stat. 2029.)

cite as: 12 USC 1715z-9