12 USC 1721 - Management and liquidation functions of Government National Mortgage Association

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

§ 1721.

Management and liquidation functions of Government National Mortgage Association

(a)

Separate accountability of assets and liabilities

(b)

Issuance of obligations to expedite substitution of private financing

(c)

Cutoff date as controlling purchases; total amount of mortgages and commitments

(d)

Issuance of obligations sufficient to carry out functions; character; purchase

(e)

Acquisition of mortgages offered by Secretary of Housing and Urban Development

(f)

Transfer of funds

(g)

Guarantee of principal and interest on trust certificates and other securities; fees and charges; subrogation; contract for extinguishment of right, title, or interest in mortgages; protection of interests; full faith and credit; commitments limited; limitation on fees or charges

(1)

The Association is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or other securities as shall (i) be issued by the corporation under section 1719(d) of this title, or by any other issuer approved for the purposes of this subsection by the Association, and (ii) be based on and backed by a trust or pool composed of mortgages which are insured under this chapter, or which are insured or guaranteed under the Servicemen’s Readjustment Act of 1944, title V of the Housing Act of 1949 [42 U.S.C. 1471 et seq.], or chapter 37 of title 38, or which are guaranteed under title XIII of the Public Health Service Act [42 U.S.C. 300e et seq.]; 2

 So in original. The semicolon probably should be a comma.

or guaranteed under section 1715z–13a of this title. The Association shall collect from the issuer a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to be reasonable for the analysis of any trust or other security arrangement proposed by the issuer. In the event the issuer is unable to make any payment of principal of or interest on any security guaranteed under this subsection, the Association shall make such payment as and when due in cash, and thereupon shall be subrogated fully to the rights satisfied by such payment. In any case in which (I) Federal law requires the reduction of the interest rate on any mortgage backing a security guaranteed under this subsection, (II) the mortgagor under the mortgage is a person in the military service, and (III) the issuer of such security fails to receive from the mortgagor the full amount of interest payment due, the Association may make payments of interest on the security in amounts not exceeding the difference between the amount payable under the interest rate on the mortgage and the amount of interest actually paid by the mortgagor. The Association is hereby empowered, in connection with any guaranty under this subsection, whether before or after any default, to provide by contract with the issuer for the extinguishment, upon default by the issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any mortgage or mortgages constituting the trust or pool against which the guaranteed securities are issued; and with respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such trust or pool shall become the absolute property of the Association subject only to the unsatisfied rights of the holders of the securities based on and backed by such trust or pool. No State or local law, and no Federal law (except Federal law enacted expressly in limitation of this subsection after October 8, 1980), shall preclude or limit the exercise by the Association of (A) its power to contract with the issuer on the terms stated in the preceding sentence, (B) its rights to enforce any such contract with the issuer, or (C) its ownership rights, as provided in the preceding sentence, in the mortgages constituting the trust or pool against which the guaranteed securities are issued. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty under this subsection. There shall be excluded from the total amounts set forth in subsection (c) the amounts of any mortgages acquired by the Association as a result of its operations under this subsection.

(2)

Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection, and to the extent of or in such amounts as any funding limitation approved in appropriation Acts, the Association shall enter into commitments to issue guarantees under this subsection in an aggregate amount of $110,000,000,000 during fiscal year 1996. There are authorized to be appropriated to cover the costs (as such term is defined in section 661a of title 2) of guarantees issued under this chapter by the Association such sums as may be necessary for fiscal year 1996.

(3)

(A)

No fee or charge in excess of 6 basis points may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to any guaranty of the timely payment of principal or interest on securities or notes based on or backed by mortgages that are secured by 1- to 4-family dwellings and (i) insured by the Federal Housing Administration under subchapter II of this chapter; or (ii) insured or guaranteed under the Serviceman’s Readjustment Act of 1944, chapter 37 of title 38, or title V of the Housing Act of 1949 [42 U.S.C. 1471 et seq.].

(B)

The fees charged for the guaranty of securities or on notes based on or backed by mortgages not referred to in subparagraph (A), as authorized by other provisions of law, shall be set by the Association at a level not more than necessary to create reserves sufficient to meet anticipated claims based upon actuarial analysis, and for no other purpose.

(C)

Fees or charges for the issuance of commitments or miscellaneous administrative fees of the Association shall not be on a competitive auction basis and shall remain at the level set for such fees or charges as of September 1, 1985, except that such fees or charges may be increased if reasonably related to the cost of administering the program, and for no other purpose.

(D)

Not less than 90 days before increasing any fee or charge under subparagraph (B) or (C), the Secretary shall submit to the Congress a certification that such increase is solely for the purpose specified in such subparagraph.

(E)

(i)

Notwithstanding subparagraphs (A) through (D), fees charged for the guarantee of, or commitment to guarantee, multiclass securities backed by a trust or pool of securities or notes guaranteed by the Association under this subsection, and other related fees shall be charged by the Association in an amount the Association deems appropriate. The Association shall take such action as may be necessary to reasonably assure that such portion of the benefit, resulting from the Association’s multiclass securities program, as the Association determines is appropriate accrues to mortgagors who execute eligible mortgages after August 10, 1993.

(ii)

The Association shall provide for the initial implementation of the program for which fees are charged under the first sentence of clause (i) by notice published in the Federal Register. The notice shall be effective upon publication and shall provide an opportunity for public comment. Not later than 12 months after publication of the notice, the Association shall issue regulations for such program based on the notice, comments received, and the experience of the Association in carrying out the program during such period.

(iii)

The Association shall consult with persons or entities in such manner as the Association deems appropriate to ensure the efficient commencement and operation of the multiclass securities program.

(iv)

No State or local law, and no Federal law (except Federal law enacted expressly in limitation of this clause after August 10, 1993) shall preclude or limit the exercise by the Association of its power to contract with persons or entities, and its rights to enforce such contracts, for the purpose of ensuring the efficient commencement and continued operation of the multiclass securities program.

(June 27, 1934, ch. 847, title III, § 306, 48 Stat. 1255; July 1, 1948, ch. 784, § 1, 62 Stat. 1209; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 618; Aug. 7, 1956, ch. 1029, title II, § 209, 70 Stat. 1097; Pub. L. 86–372, title III, §§ 305(a), 306(a), Sept. 23, 1959, 73 Stat. 670; Pub. L. 87–70, title VI, § 601(c), June 30, 1961, 75 Stat. 176; Pub. L. 88–560, title VII, § 701(b)(2), Sept. 2, 1964, 78 Stat. 800; Pub. L. 89–117, title VIII, § 802(b), Aug. 10, 1965, 79 Stat. 494; Pub. L. 90–19, § 1(k), May 25, 1967, 81 Stat. 18; Pub. L. 90–448, title VIII, § 804(b), Aug. 1, 1968, 82 Stat. 542; Pub. L. 93–222, § 7(c), Dec. 29, 1973, 87 Stat. 936; Pub. L. 96–399, title III, § 335, Oct. 8, 1980, 94 Stat. 1654; Pub. L. 97–35, title III, § 333(a)(3), Aug. 13, 1981, 95 Stat. 413; Pub. L. 98–181, title I [title IV, § 481], Nov. 30, 1983, 97 Stat. 1239; Pub. L. 98–479, title II, § 203(a)(2), Oct. 17, 1984, 98 Stat. 2229; Pub. L. 100–14, Mar. 24, 1987, 101 Stat. 128; Pub. L. 100–242, title IV, § 446, Feb. 5, 1988, 101 Stat. 1922; Pub. L. 101–625, title III, § 339, Nov. 28, 1990, 104 Stat. 4147; Pub. L. 102–550, title V, §§ 531, 532, Oct. 28, 1992, 106 Stat. 3793; Pub. L. 103–66, title III, § 3004, Aug. 10, 1993, 107 Stat. 339; Pub. L. 103–120, § 10, Oct. 27, 1993, 107 Stat. 1151; Pub. L. 104–120, § 7, Mar. 28, 1996, 110 Stat. 836; Pub. L. 104–330, title VII, § 701(k), Oct. 26, 1996, 110 Stat. 4050; Pub. L. 105–244, title IX, § 972(a), Oct. 7, 1998, 112 Stat. 1837; Pub. L. 107–326, § 4, Dec. 4, 2002, 116 Stat. 2793; Pub. L. 108–199, div. A, title VII, § 774, Jan. 23, 2004, 118 Stat. 40; Pub. L. 115–174, title III, § 309(b), May 24, 2018, 132 Stat. 1350; Pub. L. 116–33, § 2(a), July 25, 2019, 133 Stat. 1038.)

cite as: 12 USC 1721