(a) Terms of loan
(1) If the Secretary determines that an applicant is eligible for assistance as provided in section 1471 of this title and that the applicant has the ability to repay in full the sum to be loaned, with interest, giving due consideration to the income and earning capacity of the applicant and his family from the farm and other sources, and the maintenance of a reasonable standard of living for the owner and the occupants of said farm, a loan may be made by the Secretary to said applicant for a period of not to exceed thirty-three years from the making of the loan with interest. The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant's note to compensate for any deficiency in the applicant's repayment ability. At the borrower's option, the borrower may prepay to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 1471(e) of this title.
(2) The Secretary may extend the period of any loan made under this section if the Secretary determines that such extension is necessary to permit the making of such loan to any person whose income does not exceed 60 per centum of the median income for the area and who would otherwise be denied such loan because the payments required under a shorter period would exceed the financial capacity of such person. The aggregate period for which any loan may be extended under this paragraph may not exceed 5 years.
(3)
(A) Notwithstanding any other provision of this subchapter, a loan may be made under this section for the purchase of a dwelling located on land owned by a community land trust, if the borrower and the loan otherwise meet the requirements applicable to loans under this section.
(B) For purposes of this paragraph, the term "community land trust" means a community housing development organization as such term is defined in section 12704 of this title (except that the requirements under section 12704(6)(C) of this title and section 12704(6)(D) of this title shall not apply for purposes of this paragraph)—
(i) that is not sponsored by a for-profit organization;
(ii) that is established to carry out the activities under clause (iii);
(iii) that—
(I) acquires parcels of land, held in perpetuity, primarily for conveyance under long-term ground leases;
(II) transfers ownership of any structural improvements located on such leased parcels to the lessees; and
(III) retains a preemptive option to purchase any such structural improvement at a price determined by formula that is designed to ensure that the improvement remains affordable to low- and moderate-income families in perpetuity; and
(iv) that has its corporate membership open to any adult resident of a particular geographic area specified in the bylaws of the organization.
(b) Provisions of loan instrument
The instruments under which the loan is made and the security given shall—
(1) provide for security upon the applicant's equity in the farm or such other security or collateral, if any, as may be found necessary by the Secretary reasonably to assure repayment of the indebtedness;
(2) provide for the repayment of principal and interest in accordance with schedules and repayment plans prescribed by the Secretary, except that any prepayment of a loan made or insured under section 1484 or 1485 of this title shall be subject to the provisions of subsection (c);
(3) except for guaranteed loans, contain the agreement of the borrower that he will, at the request of the Secretary, proceed with diligence to refinance the balance of the indebtedness through cooperative or other responsible private credit sources whenever the Secretary determines, in the light of the borrower's circumstances, including his earning capacity and the income from the farm, that he is able to do so upon reasonable terms and conditions;
(4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the loan with interest, protect the security, and assure that the farm will be maintained in repair and that waste and exhaustion of the farm will be prevented.
(c) Prepayment and refinancing provisions
(1)
(A) The Secretary may not accept an offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any loan made or insured under section 1484 or 1485 of this title pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, unless the Secretary takes appropriate action which will obligate the borrower (and successors in interest thereof) to utilize the assisted housing and related facilities for the purposes specified in section 1484 or 1485 of this title, as the case may be, for a period of—
(i) fifteen years from the date on which the loan was made in the case of a loan made or insured pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, and utilized for housing and related facilities which have not received assistance under section 1490a(a)(1)(B), (a)(2), or (5) of this title or section 1437f of this title; or
(ii) twenty years from the date on which the loan was made in the case of any other such loan;
or until the Secretary determines (prior to the end of such period) that there is no longer a need for such housing and related facilities to be so utilized or that Federal or other financial assistance provided to the residents of such housing will no longer be provided.
(B) The Secretary may not accept an offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any initial loan made or insured under section 1485 of this title pursuant to a contract entered into on or after December 15, 1989.
(2) If any loan which was made or insured under section 1484 or 1485 of this title pursuant to a contract entered into prior to December 15, 1989, is prepaid or refinanced on or after October 8, 1980, and tenants of the housing and related facilities financed with such loan are displaced due to a change in the use of the housing, or to an increase in rental or other charges, as a result of such prepayment or refinancing, the Secretary shall provide such tenants a priority for relocation in alternative housing assisted pursuant to this subchapter.
(3)
(4)
(A)
(B)
(i) Increase in the rate of return on investment.
(ii) Reduction of the interest rate on the loan through the provision of interest credits under section 1490a(a)(1)(B) of this title, or additional assistance or an increase in assistance provided under section 1490a(a)(5) of this title.
(iii) Additional rental assistance, or an increase in assistance provided under existing contracts, under section 1490a(a)(2) or 1490a(a)(5) of this title or under section 1437f of this title.
(iv) An equity loan to the borrower under paragraphs (1) and (2) of section 1485(c) of this title or under paragraphs (1) and (2) of section 1484(j) 1 of this title, except that an equity loan referred to in this clause may not be made available after August 6, 1996, unless the Secretary determines that the other incentives available under this subparagraph are not adequate to provide a fair return on the investment of the borrower, to prevent prepayment of the loan insured under section 1484 or 1485 of this title, or to prevent the displacement of tenants of the housing for which the loan was made.
(v) Incremental rental assistance in connection with loans under clauses (ii) and (iv) to the extent necessary to avoid increases in the rental payments of current tenants not receiving rental assistance under section 1490a(a)(2) of this title or under section 1437f of this title, or current tenants of projects not assisted under section 1490a(a)(5) of this title.
(vi) In the case of a project that has received rental assistance under section 1437f of this title, permitting the owner to receive rent in excess of the amount determined necessary by the Secretary to defray the cost of long-term repair or maintenance of such a project.
(C)
(i) is necessary to provide a fair return on the investment of the borrower; and
(ii) is the least costly alternative for the Federal Government that is consistent with carrying out the purposes of this subsection.
(5)
(A)
(i)
(ii)
(B)
(i)
(I) the organization or agency is determined by the Secretary to be capable of managing the housing and related facilities (either directly or through a contract) for the remaining useful life of the housing and related facilities; and
(II) the organization or agency has entered into an agreement that obligates it (and successors in interest thereof) to maintain the housing and related facilities as affordable for very low-income families or persons and low income families or persons for the remaining useful life of the housing and related facilities.
(ii)
(iii)
(C)
(i) to the extent provided in appropriation Acts, make an advance to the nonprofit organization or public agency whose offer to purchase is accepted under this paragraph to cover any direct costs (other than the purchase price) incurred by the organization or agency in purchasing and assuming responsibility for the housing and related facilities involved;
(ii) approve the assumption, by the nonprofit organization or public agency involved, of the loan made or insured under section 1484 or 1485 of this title;
(iii) to the extent provided in appropriation Acts, transfer any rental assistance payments that are received under section 1490a(a)(2)(A) of this title or under section 1437f of this title, or any assistance payments received under section 1490a(a)(5) of this title, with respect to the housing and related facilities involved; and
(iv) to the extent provided in appropriation Acts, provide a loan under section 1485(c)(3) of this title to the nonprofit organization or public agency whose offer to purchase is accepted under this paragraph to enable the organization or agency to purchase the housing and related facilities involved.
(D)
(E)
(i) the transfer will further the provision of housing and related facilities for low income families or persons; or
(ii) there is no longer a need for such housing and related facilities by low income families or persons.
(F)
(G)
(i) the borrower enters into an agreement with the Secretary that obligates the borrower (and successors in interest thereof)—
(I) to utilize the assisted housing and related facilities for the purposes specified in section 1484 or 1485 of this title, as the case may be, for a period determined by the Secretary (but not less than the period described in paragraph (1)(B) calculated from the date on which the loan is made or insured); and
(II) upon termination of the period described in paragraph (1)(B), to offer to sell the assisted housing and related facilities to a qualified nonprofit organization or public agency in accordance with this paragraph; or
(ii) the Secretary determines that housing opportunities of minorities will not be materially affected as a result of the prepayment or refinancing, and that—
(I) the borrower (and any successor in interest thereof) are obligated to ensure that tenants of the housing and related facilities financed with the loan will not be displaced due to a change in the use of the housing, or to an increase in rental or other charges, as a result of the prepayment or refinancing; or
(II) there is an adequate supply of safe, decent, and affordable rental housing within the market area of the housing and related facilities and sufficient actions have been taken to ensure that the rental housing will be made available to each tenant upon displacement.
(H)
(i)
(ii)
(I)
(i)
(I) has a broad based board reflecting various interests in the community or trade area; and
(II) is a not-for-profit charitable organization whose principal purposes include developing or managing low income housing or community development projects.
(ii)
(I) no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual;
(II) that is approved by the Secretary as to financial responsibility; and
(III) that does not have among its officers or directorate persons or parties with a material interest (or persons or parties related to any person or party with such an interest) in loans financed under section 1485 of this title that have been prepaid.
(J)
(d) Dwelling units available to very low-income families or persons
On and after November 30, 1983—
(1) not less than 40 percent of the funds approved in appropriation Acts for use under this section shall be set aside and made available only for very low-income families or persons; and
(2) not less than 30 percent of the funds allocated to each State under this section shall be available only for very low-income families or persons.
(e) Manufactured homes; qualifications for loans made or insured; energy conservation requirements
(1) A loan which may be made or insured under this section with respect to housing shall be made or insured with respect to a manufactured home or with respect to a manufactured home and lot, whether such home or such home and lot is real property, personal property, or mixed real and personal property, if—
(A) the manufactured home meets the standards prescribed pursuant to title VI of the Housing and Community Development Act of 1974 [42 U.S.C. 5401 et seq.];
(B) the manufactured home, or the manufactured home and lot, meets the installation, structural, and site requirements which would apply under title II of the National Housing Act [12 U.S.C. 1707 et seq.]; and
(C) the manufactured home meets the energy conserving requirements established under paragraph (2), or until the energy conserving requirements are established under paragraph (2), the manufactured home meets the energy conserving requirements applicable to housing other than manufactured housing financed under this subchapter.
(2) Energy conserving requirements established by the Secretary for the purpose of paragraph (1)(C) shall—
(A) reduce the operating costs for a borrower by maximizing the energy savings and be cost-effective over the life of the manufactured home or the term of the loan, whichever is shorter, taking into account variations in climate, types of energy used, the cost to modify the home to meet such requirements, and the estimated value of the energy saved over the term of the mortgage; and
(B) be established so that the increase in the annual loan payment resulting from the added energy conserving requirements in excess of those required by the standards prescribed under title VI of the Housing and Community Development Act of 1974 [42 U.S.C. 5401 et seq.] shall not exceed the projected savings in annual energy costs.
(3) A loan that may be made or insured under this section with respect to a manufactured home on a permanent foundation, or a manufactured home on a permanent foundation and a lot, shall be repayable over the same period as would be applicable under section 203(b) of the National Housing Act [12 U.S.C. 1709(b)].
(f) Remote rural areas
(1) Loan supplements
The Secretary may supplement any loan under this section to finance housing located in a remote rural area or on tribal allotted or Indian trust land with a grant in an amount not greater than the amount by which the reasonable land acquisition and construction costs of the security property exceeds the appraised value of such property.
(2) Prohibition
The Secretary may not refuse to make, insure, or guarantee a loan that otherwise meets the requirements under this section solely on the basis that the housing involved is located in an area that is excessively rural in character or excessively remote or on tribal allotted or Indian trust land.
(g) Deferred mortgage demonstration
(1) Authority
With respect to families or persons otherwise eligible for assistance under subsection (d) but having incomes below the amount determined to qualify for a loan under this section, the Secretary may defer mortgage payments beyond the amount affordable at 1 percent interest, taking into consideration income, taxes and insurance. Deferred mortgage payments shall be converted to payment status when the ability of the borrower to repay improves. Deferred amounts shall not exceed 25 percent of the amount of the payment due at 1 percent interest and shall be subject to recapture.
(2) Interest
Interest on principal deferred shall be set at 1 percent and any interest payments deferred under this subsection shall not be treated as principal in calculating indebtedness.
(3) Funding
Subject to approval in appropriations Acts, not more than 10 percent of the amount approved for each of fiscal years 1993 and 1994 for loans under this section may be used to carry out this subsection.
(h) Doug Bereuter section 502 single family housing loan guarantee program
(1) Short title
This subsection may be cited as the "Doug Bereuter Section 502 Single Family Housing Loan Guarantee Act".
(2) Authority
The Secretary shall, to the extent provided in appropriation Acts, provide guaranteed loans in accordance with this section, section 1487(d) of this title, and the last sentence of section 1490a(a)(1)(A) of this title, except as modified by the provisions of this subsection. Loans shall be guaranteed under this subsection in an amount equal to 90 percent of the loan.
(3) Eligible borrowers
Loans guaranteed pursuant to this subsection shall be made only to borrowers who are low or moderate income families or persons, whose incomes do not exceed 115 percent of the median income of the area, as determined by the Secretary.
(4) Eligible housing
Loans may be guaranteed pursuant to this subsection only if the loan is used to acquire or construct a single-family residence that is—
(A) to be used as the principal residence of the borrower;
(B) eligible for assistance under this section, section 203(b) of the National Housing Act [12 U.S.C. 1709(b)], or chapter 37 of title 38; and
(C) located in a rural area.
(5) Priority and counseling for first-time homebuyers
(A) In providing guaranteed loans under this subsection, the Secretary shall give priority to first-time homebuyers (as defined in paragraph (17)).
(B) The Secretary may require that, as a condition of receiving a guaranteed loan pursuant to this subsection, a borrower who is a first-time homebuyer successfully complete a program of homeownership counseling under section 1701x(a)(1)(iii) of title 12 and obtain certification from the provider of the program that the borrower is adequately prepared for the obligations of homeownership.
(6) Eligible lenders
Guaranteed loans pursuant to this subsection may be made only by lenders approved by and meeting qualifications established by the Secretary.
(7) Loan terms
Loans guaranteed pursuant to this subsection shall—
(A) be made for a term not to exceed 30 years;
(B) involve a rate of interest that is fixed over the term of the loan and does not exceed the rate for loans guaranteed under chapter 37 of title 38 or comparable loans in the area that are not guaranteed; and
(C) involve a principal obligation (including initial service charges, appraisal, inspection, and other fees as the Secretary may approve)—
(i) for a first-time homebuyer, in any amount not in excess of 100 percent of the appraised value of the property as of the date the loan is accepted or the acquisition cost of the property, whichever is less, plus the guarantee fee as authorized by subsection (h)(7); 2 and
(ii) for any borrower other than a first-time homebuyer, in an amount not in excess of the percentage of the property or the acquisition cost of the property that the Secretary shall determine, such percentage or cost in any event not to exceed 100 percent of the appraised value of the property as of the date the loan is accepted or the acquisition cost of the property, whichever is less, plus the guarantee fee as authorized by subsection (h)(7).2
(8) Fees
Notwithstanding paragraph (14)(D), with respect to a guaranteed loan issued or modified under this subsection, the Secretary may collect from the lender—
(A) at the time of issuance of the guarantee or modification, a fee not to exceed 3.5 percent of the principal obligation of the loan; and
(B) an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan.
(9) Refinancing
Any guaranteed loan under this subsection may be refinanced and extended in accordance with terms and conditions that the Secretary shall prescribe, but in no event for an additional amount or term which exceeds the limitations under this subsection.
(10) Nonassumption
Notwithstanding the transfer of property for which a guaranteed loan under this subsection was made, the borrower of a guaranteed loan under this subsection may not be relieved of liability with respect to the loan.
(11) Geographical targeting
In providing guaranteed loans under this subsection, the Secretary shall establish standards to target and give priority to areas that have a demonstrated need for additional sources of mortgage financing for low and moderate income families.
(12) Allocation
The Secretary shall provide that, in each fiscal year, guaranteed loans under this subsection shall be allocated among the States on the basis of the need of eligible borrowers in each State for such loans in comparison with the need of eligible borrowers for such loans among all States.
(13) Loss mitigation
Upon default or imminent default of any mortgage guaranteed under this subsection, mortgagees shall engage in loss mitigation actions for the purpose of providing an alternative to foreclosure (including actions such as special forbearance, loan modification, pre-foreclosure sale, deed in lieu of foreclosure, as required, support for borrower housing counseling, subordinate lien resolution, and borrower relocation), as provided for by the Secretary.
(14) Payment of partial claims and mortgage modifications
The Secretary may authorize the modification of mortgages, and establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence, for mortgages that are in default or face imminent default, as defined by the Secretary. Any payment under such program directed to the mortgagee shall be made at the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that—
(A) the amount of the partial claim payment shall be in an amount determined by the Secretary, and shall not exceed an amount equivalent to 30 percent of the unpaid principal balance of the mortgage and any costs that are approved by the Secretary;
(B) the amount of the partial claim payment shall be applied first to any outstanding indebtedness on the mortgage, including any arrearage, but may also include principal reduction;
(C) the mortgagor shall agree to repay the amount of the partial claim to the Secretary upon terms and conditions acceptable to the Secretary;
(D) expenses related to a partial claim or modification are not to be charged to the borrower;
(E) the Secretary may authorize compensation to the mortgagee for lost income on monthly mortgage payments due to interest rate reduction;
(F) the Secretary may reimburse the mortgagee from the appropriate guaranty fund in connection with any activities that the mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed to the Secretary;
(G) the Secretary may authorize payments to the mortgagee on behalf of the borrower, under such terms and conditions as are defined by the Secretary, based on successful performance under the terms of the mortgage modification, which shall be used to reduce the principal obligation under the modified mortgage; and
(H) the Secretary may authorize the modification of mortgages with terms extended up to 40 years from the date of modification.
(15) Assignment
(A) Program authority
The Secretary may establish a program for assignment to the Secretary, upon request of the mortgagee, of a mortgage on a 1- to 4-family residence guaranteed under this chapter.1
(B) Program requirements
(i) In general
The Secretary may encourage loan modifications for eligible delinquent mortgages or mortgages facing imminent default, as defined by the Secretary, through the payment of the guaranty and assignment of the mortgage to the Secretary and the subsequent modification of the terms of the mortgage according to a loan modification approved under this section.
(ii) Acceptance of assignment
The Secretary may accept assignment of a mortgage under a program under this subsection only if—
(I) the mortgage is in default or facing imminent default;
(II) the mortgagee has modified the mortgage or qualified the mortgage for modification sufficient to cure the default and provide for mortgage payments the mortgagor is reasonably able to pay, at interest rates not exceeding current market interest rates; and
(III) the Secretary arranges for servicing of the assigned mortgage by a mortgagee (which may include the assigning mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate guaranty fund.
(C) Payment of guaranty
Under the program under this paragraph, the Secretary may pay the guaranty for a mortgage, in the amount determined in accordance with paragraph (2), without reduction for any amounts modified, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage, as defined by the Secretary.
(D) Disposition
After modification of a mortgage pursuant to this paragraph, and assignment of the mortgage, the Secretary may provide guarantees under this subsection for the mortgage. The Secretary may subsequently—
(i) re-assign the mortgage to the mortgagee under terms and conditions as are agreed to by the mortgagee and the Secretary;
(ii) act as a Government National Mortgage Association issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Government National Mortgage Association security; or
(iii) re-sell the mortgage in accordance with any program that has been established for purchase by the Federal Government of mortgages insured under this subchapter, and the Secretary may coordinate standards for interest rate reductions available for loan modification with interest rates established for such purchase.
(E) Loan servicing
In carrying out the program under this subsection, the Secretary may require the existing servicer of a mortgage assigned to the Secretary under the program to continue servicing the mortgage as an agent of the Secretary during the period that the Secretary acquires and holds the mortgage for the purpose of modifying the terms of the mortgage. If the mortgage is resold pursuant to subparagraph (D)(iii), the Secretary may provide for the existing servicer to continue to service the mortgage or may engage another entity to service the mortgage.
(16) Definitions
For purposes of this subsection:
(A) The term "displaced homemaker" means an individual who—
(i) is an adult;
(ii) has not worked full-time full-year in the labor force for a number of years but has, during such years, worked primarily without remuneration to care for the home and family; and
(iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.
(B) The term "first-time homebuyer" means any individual who (and whose spouse) has had no present ownership in a principal residence during the 3-year period ending on the date of purchase of the property acquired with a guaranteed loan under this subsection except that—
(i) any individual who is a displaced homemaker may not be excluded from consideration as a first-time homebuyer under this subparagraph on the basis that the individual, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse; and
(ii) any individual who is a single parent may not be excluded from consideration as a first-time homebuyer under this subparagraph on the basis that the individual, while married, owned a home with his or her spouse or resided in a home owned by the spouse.
(C) The term "single parent" means an individual who—
(i) is unmarried or legally separated from a spouse; and
(ii)
(I) has 1 or more minor children for whom the individual has custody or joint custody; or
(II) is pregnant.
(D) The term "State" means the States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, and any other possession of the United States.
(17) Guarantees for refinancing loans
(A) In general
Upon the request of the borrower, the Secretary shall, to the extent provided in appropriation Acts and subject to subparagraph (F), guarantee a loan that is made to refinance an existing loan that is made under this section or guaranteed under this subsection, and that the Secretary determines complies with the requirements of this paragraph.
(B) Interest rate
To be eligible for a guarantee under this paragraph, the refinancing loan shall have a rate of interest that is fixed over the term of the loan and does not exceed the interest rate of the loan being refinanced.
(C) Security
To be eligible for a guarantee under this paragraph, the refinancing loan shall be secured by the same single-family residence as was the loan being refinanced, which shall be owned by the borrower and occupied by the borrower as the principal residence of the borrower.
(D) Amount
To be eligible for a guarantee under this paragraph, the principal obligation under the refinancing loan shall not exceed an amount equal to the sum of the balance of the loan being refinanced and such closing costs as may be authorized by the Secretary, which shall include a discount not exceeding 200 basis points and an origination fee not exceeding such amount as the Secretary shall prescribe.
(E) Other requirements
The provisions of the last sentence of paragraph (2) and paragraphs (3), (6), (7)(A), (8), (10), (13), and (14) shall apply to loans guaranteed under this paragraph, and no other provisions of paragraphs (2) through (15) shall apply to such loans.
(F) Authority to establish limitation
The Secretary may establish limitations on the number of loans guaranteed under this paragraph, which shall be based on market conditions and other factors as the Secretary considers appropriate.
(18) Delegation of approval
The Secretary may delegate, in part or in full, the Secretary's authority to approve and execute binding Rural Housing Service loan guarantees pursuant to this subsection to certain preferred lenders, in accordance with standards established by the Secretary.
(i) Guaranteed underwriting user fee
(1) Authority; maximum amount
To the extent provided in advance in appropriations Acts, the Secretary may assess and collect a fee for a lender to access the automated underwriting systems of the Department in connection with such lender's participation in the single family loan program under this section and only in an amount necessary to cover the costs of information technology enhancements, improvements, maintenance, and development for automated underwriting systems used in connection with the single family loan program under this section, except that such fee shall not exceed $50 per loan.
(2) Crediting; availability
Any amounts collected from such fees shall be credited to the Rural Development Expense Account as offsetting collections and shall remain available until expended, in the amounts provided in appropriation Acts, solely for expenses described in paragraph (1).
References in Text
Section 1484(j) of this title, referred to in subsec. (c)(4)(B)(iv), was repealed by Pub. L. 106–569, title VII, §708(b), Dec. 27, 2000, 114 Stat. 3018.
The Housing and Community Development Act of 1974, referred to in subsec. (e)(1)(A), (2)(B), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. Title VI of the Housing and Community Development Act of 1974 is known as the National Manufactured Housing Construction and Safety Standards Act of 1974 and is classified generally to chapter 70 (§5401 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables.
The National Housing Act, referred to in subsec. (e)(1)(B), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the National Housing Act is classified principally to subchapter II (§1707 et seq.) of chapter 13 of Title 12, Banks and Banking. For complete classification of this Act to the Code, see section 1701 of Title 12 and Tables.
Section 502, referred to in subsec. (h), means section 502 of act July 15, 1949, ch. 338, 63 Stat. 433, which is classified to this section.
This chapter, referred to in subsec. (h)(15)(A), appearing in the original is unidentifiable because title V of act July 15, 1949, does not contain chapters.
Amendments
2018—Subsec. (i)(1). Pub. L. 115–141 added par. (1) and struck out former par. (1). Prior to amendment, text read as follows: "The Secretary may assess and collect a fee for a lender to access the automated underwriting systems of the Department in connection with such lender's participation in the single family loan program under this section and only in an amount necessary to cover the costs of information technology enhancements, improvements, maintenance, and development for automated underwriting systems used in connection with the single family loan program under this section, except that such fee shall not exceed $50 per loan."
2016—Subsec. (h)(18). Pub. L. 114–201, §201, added par. (18).
Subsec. (i). Pub. L. 114–201, §202, added subsec. (i).
2010—Subsec. (h)(8). Pub. L. 111–212 amended par. (8) generally. Prior to amendment, text read as follows: "With respect to a guaranteed loan under this subsection, the Secretary may collect from the lender at the time of issuance of the guarantee a fee equal to not more than 1 percent of the principal obligation of the loan."
2009—Subsec. (h)(5)(A). Pub. L. 111–22, §101(b)(1), substituted "(as defined in paragraph (17))" for "(as defined in paragraph (13))".
Subsec. (h)(13) to (16). Pub. L. 111–22, §101(a), added pars. (13) to (15) and redesignated former par. (13) as (16). Former par. (14) redesignated (17).
Subsec. (h)(17). Pub. L. 111–22, §101(a)(1), redesignated par. (14) as (17).
Subsec. (h)(17)(E). Pub. L. 111–22, §101(b)(2), which directed amendment of "paragraph (18)(E)[ ](as so redesignated by subsection (a)(2))" by substituting "paragraphs (3), (6), (7)(A), (8), (10), (13), and (14)" for "paragraphs (3), (6), (7)(A), (8), and (10)" and "paragraphs (2) through (15)" for "paragraphs (2) through (13)", was executed by making the substitutions in par. (17)(E) to reflect the probable intent of Congress.
2004—Subsec. (h). Pub. L. 108–285, §3(b)(3), substituted "Doug Bereuter section 502 single family housing loan guarantee program" for "Guaranteed loans" in heading.
Subsec. (h)(1) to (4). Pub. L. 108–285, §3(b)(1), (2), added par. (1) and redesignated former pars. (1) to (3) as (2) to (4), respectively. Former par. (4) redesignated (5).
Subsec. (h)(5). Pub. L. 108–285, §3(b)(1), redesignated par. (4) as (5). Former par. (5) redesignated (6).
Subsec. (h)(5)(A). Pub. L. 108–285, §3(c)(1), substituted "paragraph (13)" for "paragraph (12)(A)".
Subsec. (h)(6). Pub. L. 108–285, §3(b)(1), redesignated par. (5) as (6). Former par. (6) redesignated (7).
Subsec. (h)(7). Pub. L. 108–285, §3(b)(1), redesignated par. (6) as (7). Former par. (7) redesignated (8).
Subsec. (h)(7)(C). Pub. L. 108–447, which directed insertion of ", plus the guarantee fee as authorized by subsection (h)(7)" after "whichever is less" in pars. (i) and (ii) of subsec. (h)(6)(C), was executed by making the insertion in cls. (i) and (ii) of par. (7)(C), to reflect the probable intent of Congress and the amendment by Pub. L. 108–285, §3(b)(1). See above.
Subsec. (h)(8) to (13). Pub. L. 108–285, §3(b)(1), redesignated pars. (7) to (12) as (8) to (13), respectively. Former par. (13) redesignated (14).
Subsec. (h)(14). Pub. L. 108–285, §3(b)(1), redesignated par. (13) as (14).
Subsec. (h)(14)(A). Pub. L. 108–285, §3(c)(2)(A), made technical amendment to heading in original Act.
Subsec. (h)(14)(E). Pub. L. 108–285, §3(c)(2)(B), substituted "paragraph (2) and paragraphs (3), (6), (7)(A), (8), and (10)" for "paragraph (1) and paragraphs (2), (5), (6)(A), (7), and (9)" and "paragraphs (2) through (13)" for "paragraphs (1) through (12)".
2000—Subsec. (h)(13). Pub. L. 106–569 added par. (13).
1998—Subsec. (c)(1)(A)(i). Pub. L. 105–276, §599C(e)(2)(A)(i), substituted ", (a)(2), or (5)" for "or (a)(2)".
Subsec. (c)(4)(B)(ii). Pub. L. 105–276, §599C(e)(2)(A)(ii), inserted before period at end ", or additional assistance or an increase in assistance provided under section 1490a(a)(5) of this title".
Subsec. (c)(4)(B)(iii). Pub. L. 105–276, §599C(e)(2)(A)(iii), was executed by inserting "or 1490a(a)(5)" after "section 1490a(a)(2)" to reflect the probable intent of Congress, notwithstanding the fact that the verb "inserting" was missing from the directory language.
Subsec. (c)(4)(B)(v). Pub. L. 105–276, §599C(e)(2)(A)(iv), inserted before period at end ", or current tenants of projects not assisted under section 1490a(a)(5) of this title".
Subsec. (c)(5)(C)(iii). Pub. L. 105–276, §599C(e)(2)(A)(v), struck out comma after "1490a(a)(2)(A) of this title" and inserted "or any assistance payments received under section 1490a(a)(5) of this title," before "with respect".
Subsec. (c)(5)(D). Pub. L. 105–276, §599C(e)(2)(A)(vi), inserted before period at end "or, in the case of housing assisted under section 1490a(a)(5) of this title, does not exceed the rents established for the project under such section".
Subsec. (h)(6)(C). Pub. L. 105–276, §599C(f), which directed the striking out of ", subject to the maximum dollar amount limitation of section 203(b)(2) of the National Housing Act" each place it appeared, was executed by striking out ", subject to the maximum dollar limitation of section 203(b)(2) of the National Housing Act" after "whichever is less" in cl. (i) and after "Secretary shall determine" in cl. (ii), to reflect the probable intent of Congress.
1996—Subsec. (c)(4)(B)(iv). Pub. L. 104–180, §734(c)(3)(A), inserted before period at end "or under paragraphs (1) and (2) of section 1484(j) of this title, except that an equity loan referred to in this clause may not be made available after August 6, 1996, unless the Secretary determines that the other incentives available under this subparagraph are not adequate to provide a fair return on the investment of the borrower, to prevent prepayment of the loan insured under section 1484 or 1485 of this title, or to prevent the displacement of tenants of the housing for which the loan was made".
Subsec. (c)(4)(C). Pub. L. 104–180, §734(c)(3)(B), in introductory provisions substituted "The Secretary may approve assistance under subparagraph (B) for assisted housing only if the restrictive period has expired for any loan for the housing made or insured under section 1484 or 1485 of this title pursuant to a contract entered into after December 21, 1979, but before December 15, 1989, and the Secretary determines that the combination of assistance provided—" for "The Secretary may approve assistance under subparagraph (B) only if the Secretary determines that the combination of assistance provided—".
1992—Subsec. (a)(3). Pub. L. 102–550, §702(a), added par. (3).
Subsec. (c)(2), (4)(A). Pub. L. 102–550, §712(a)(1), (2), substituted "prior to December 15, 1989" for "before December 21, 1979".
Subsec. (e)(4)(B)(vi). Pub. L. 102–550, §712(b), added cl. (vi).
Subsec. (e)(5)(F), (G). Pub. L. 102–550, §712(a)(3), (4), substituted "prior to December 15, 1989" for "before December 21, 1979".
Subsec. (f). Pub. L. 102–550, §704, inserted "or on tribal allotted or Indian trust land" in pars. (1) and (2).
Subsec. (g)(3). Pub. L. 102–550, §701(g), substituted "1993 and 1994" for "1991 and 1992".
Subsec. (h)(2). Pub. L. 102–550, §703, inserted "115 percent of" after "exceed".
1991—Subsec. (h)(3)(C). Pub. L. 102–142 struck out before period at end "that is more than 25 miles from an urban area or densely populated area".
1990—Subsec. (c)(1)(B). Pub. L. 101–625, §719(b), inserted "initial" after "any".
Subsec. (f). Pub. L. 101–625, §704(a), added subsec. (f).
Subsec. (g). Pub. L. 101–625, §705(a), added subsec. (g).
Subsec. (h). Pub. L. 101–625, §706(b), added subsec. (h).
1989—Subsec. (c)(1). Pub. L. 101–235 designated existing provisions as subpar. (A), redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, inserted "but before December 15, 1989," after "December 21, 1979," in introductory provisions and cl. (i), and added subpar. (B).
1988—Subsec. (c)(3). Pub. L. 100–242, §241, added par. (3).
Subsec. (c)(4). Pub. L. 100–242, §241, added par. (4).
Subsec. (c)(4)(B)(iv). Pub. L. 100–628, §1028(a), substituted "paragraphs (1) and (2) of section 1485(c)" for "paragraphs (7) and (8) of section 1485(b)".
Subsec. (c)(5). Pub. L. 100–242, §241, added par. (5).
Subsec. (c)(5)(B)(iii). Pub. L. 100–628, §1028(b), added cl. (iii).
Subsec. (c)(5)(I). Pub. L. 100–628, §1028(c), substituted "Definitions" for "Definition" in heading and amended text generally. Prior to amendment, text read as follows: "For purposes of this paragraph, the term 'nonprofit organization' means any private organization—
"(i) no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual; and
"(ii) that is approved by the Secretary as to financial responsibility."
Subsec. (e)(3). Pub. L. 100–242, §314, added par. (3).
1984—Subsec. (d)(1). Pub. L. 98–479 substituted "percent of the funds approved in appropriation Acts for use under this section shall be set aside and made available only for very low-income families or persons" for "per centum of the dwelling units financed under this section shall be available only for occupancy by very low-income families or persons".
Subsec. (d)(2). Pub. L. 98–479 substituted "percent of the funds allocated to each State under this section shall be available only for very low-income families or persons" for "per centum of the dwelling units in each State financed under this section shall be available only for occupancy by very low-income families or persons".
1983—Subsec. (a)(1). Pub. L. 98–181, §503(d)(1), (2), designated existing provisions as par. (1) and substituted "The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant's note to compensate for any deficiency in the applicant's repayment ability. At the borrower's option, the borrower may prepay to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 1471(e) of this title" for "in the case of applicants described in clauses (1) and (2) of section 1471(a) of this title, at a rate not to exceed 5 per centum per annum on the unpaid balance of principal, and, in the case of applicants described in clause (3) of section 1471(a) of this title and applicants under sections 1473 and 1474 of this title, at a rate not to exceed 4 per centum per annum on such unpaid balance. Loans made or insured under this subchapter shall be conditioned on the borrower paying such fees and other charges as the Secretary may require and on the borrower prepaying to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 1471(e) of this title. The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant's note to compensate for any deficiency in the applicant's repayment ability".
Subsec. (a)(2). Pub. L. 98–181, §503(d)(3), added par. (2).
Subsecs. (d), (e). Pub. L. 98–181, §503(a), added subsecs. (d) and (e).
1980—Subsec. (c). Pub. L. 96–399, in par. (1), substituted "The Secretary may not accept" for "Except as provided in paragraph (2), the Secretary may not accept", and "entered into after" for "entered into before or after" in two places, and in par. (2) substituted provisions granting priority for relocation to tenants displaced by virtue of prepayment or refinancing of loans on or after Oct. 8, 1980, for provisions relating to acceptance of an offer to prepay unless, after examination of the consequences of such offer, the Secretary determines that prepayment will result in displacement of tenants, and in the case of facilities containing more than ten units, will have an adverse effect on the supply of affordable and decent housing for low and moderate income and elderly persons.
1979—Subsec. (b)(2). Pub. L. 96–153, §503(a), inserted provisions that prepayment of loans made or insured under section 1484 or 1485 of this title shall be subject to the provisions of subsec. (c) of this section.
Subsec. (c). Pub. L. 96–153, §503(b), added subsec. (c).
1977—Subsec. (b)(3). Pub. L. 95–128 inserted introductory phrase "except for guaranteed loans,".
1974—Subsec. (a). Pub. L. 93–383 inserted provisions relating to the borrower prepaying to the Secretary as escrow agent taxes, insurance, and other expenses required by the Secretary in accordance with section 1471(e) of this title.
1966—Subsec. (a). Pub. L. 89–754 substituted "The" for "In cases of applicants who are elderly persons, the" in third sentence.
1965—Subsec. (a). Pub. L. 89–117 increased to 5 per centum the interest rate in the case of applicants described in clauses (1) and (2) of section 1471(a) of this title and also authorized the Secretary to charge fees on loans made or insured under this subchapter.
1962—Subsec. (a). Pub. L. 87–723 authorized the Secretary to accept, in the case of applicant's who are elderly persons, the personal liability of any person with adequate repayment ability who will cosign the applicant's note to compensate for any deficiency in the applicant's repayment ability.
1961—Subsec. (b)(1). Pub. L. 87–70 substituted "or such other security" for "and such additional security".
Effective Date of 1998 Amendment
Pub. L. 105–276, title V, §599C(g), Oct. 21, 1998, 112 Stat. 2663, provided that: "The amendments made by this section [amending this section and sections 1479, 1483 to 1485, 1490a, 1490j, and 1490p–2 of this title] are made on, and shall apply beginning upon, the date of the enactment of this Act [Oct. 21, 1998]."
Effective Date of 1984 Amendment
Pub. L. 98–479, title I, §105(b)(2), Oct. 17, 1984, 98 Stat. 2226, provided that: "Notwithstanding any other provision of law, the provisions of section 502(d) of the Housing Act of 1949 [subsec. (d) of this section], as amended by paragraph (1), shall apply with respect to fiscal year 1985 and thereafter, and the provisions of such section, as so amended, may not be changed or superseded except by another provision of law which amends such section."
Regulations
Pub. L. 101–625, title VII, §704(b), Nov. 28, 1990, 104 Stat. 4283, provided that: "Not later than the expiration of the 120-day period beginning on the date of enactment of this Act [Nov. 28, 1990], the Secretary of Agriculture shall issue any regulations necessary to carry out the amendment made by subsection (a) [amending this section]."
Pub. L. 101–625, title VII, §705(b), Nov. 28, 1990, 104 Stat. 4283, provided that: "Not later than the expiration of the 120-day period beginning on the date of enactment of this Act [Nov. 28, 1990], the Secretary of Agriculture shall issue any regulations necessary to carry out the amendment made by subsection (a) [amending this section]."
Pub. L. 101–625, title VII, §706(d), Nov. 28, 1990, 104 Stat. 4286, provided that:
"(1)
"(2)
"(3)
"(4)
"(A) are made in a manner that is cost-effective; and
"(B) are made in a manner that reduces, to the extent practicable, the burden of administration and paperwork for borrowers and lenders."
Termination of Trust Territory of the Pacific Islands
For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions.
Procedure
Pub. L. 111–22, div. A, title I, §101(c), May 20, 2009, 123 Stat. 1635, provided that:
"(1)
"(A) the notice and comment provisions of section 553 of title 5, United States Code;
"(B) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and
"(C) chapter 35 of title 44, United States Code (commonly known as the 'Paperwork Reduction Act').
"(2)
Congressional Findings for 2004 Amendment
Pub. L. 108–285, §3(a), Aug. 2, 2004, 118 Stat. 917, provided that: "The Congress finds that—
"(1) the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625, see Tables for classification], enacted November 28, 1990, established the section 502 single family housing loan guarantee program of the Rural Housing Service of the United States Department of Agriculture;
"(2) Congressman Doug Bereuter of Nebraska was the legislative author of the single family housing loan guarantee program;
"(3) 316,625 single family loans have been guaranteed under the program since its implementation in 1991;
"(4) the program facilitates home ownership for low- to moderate-income borrowers in rural areas and nonmetropolitan communities who are unable to obtain conventional home mortgage financing; and
"(5) in 2003, the average income of a borrower with a loan guaranteed under the section 502 guarantee program was $34,124."
Maximum Level for Rural Single Family Housing Assistance
Pub. L. 108–447, div. A, title VII, §765, Dec. 8, 2004, 118 Stat. 2847, provided that: "Notwithstanding any other provision of law, for any fiscal year and hereafter, in the case of a high cost isolated rural area in Alaska that is not connected to a road system, the maximum level for the single family housing assistance shall be 150 percent of the average income level in the metropolitan areas of the State and 115 percent of all other eligible areas of the State."
Similar provisions were contained in the following appropriation acts:
Pub. L. 109–97, title VII, §754(3), Nov. 10, 2005, 119 Stat. 2157.
Pub. L. 108–199, div. A, title VII, §763, Jan. 23, 2004, 118 Stat. 39.
Fee for Guaranteed Loans
Pub. L. 106–387, §1(a) [title VII, §739], Oct. 28, 2000, 114 Stat. 1549, 1549A–34, which provided that, notwithstanding subsec. (h)(7) of this section, the fee collected by the Secretary of Agriculture for a guaranteed loan under such subsec. (h) at the time of the issuance of such guarantee could be in an amount equal to not more than 2 percent of the principal obligation of the loan, was repealed by Pub. L. 111–212, title I, §102(b), July 29, 2010, 124 Stat. 2303.
Income Limit for Borrowers
Pub. L. 106–387, §1(a) [title VII, §751], Oct. 28, 2000, 114 Stat. 1549, 1549A–41, provided that: "Hereafter, the Secretary of Agriculture shall consider any borrower whose income does not exceed 115 percent of the median family income of the United States as meeting the eligibility requirements for a borrower contained in section 502(h)(2) of the Housing Act of 1949 (42 U.S.C. 1472(h)(2))."
Rural Housing Loan Guarantees; Findings and Purpose
Pub. L. 101–625, title VII, §706(a), Nov. 28, 1990, 104 Stat. 4284, provided that:
"(1)
"(A) the Federal Government should encourage support for homeownership through nonsubsidized mortgage loans guaranteed by the Secretary of Agriculture for the purchase of modest homes located in rural areas and small communities of the country that are not adequately served by private conventional, federally insured, or guaranteed mortgage credit providers; and
"(B) many rural areas contain disproportionate amounts of substandard housing in need of repair, but lack the necessary funding and support to modernize such housing through preservation.
"(2)
Rural Housing Guaranteed Loan Demonstration
Pub. L. 100–242, title III, §304, Feb. 5, 1988, 101 Stat. 1894, as amended by Pub. L. 100–628, title X, §1041(a), (b), Nov. 7, 1988, 102 Stat. 3272, provided for establishment by Secretary of Agriculture of a rural housing guaranteed loan demonstration to provide guaranteed loans in accordance with section 1487(d) of this title and last sentence of section 1490(a)(1)(A) of this title, authorized amount available for such loans, established loan criteria, directed Secretary to submit to Congress, as soon as practicable after Sept. 30, 1989, an interim report setting forth findings and recommendations as a result of the demonstration and a final report on such findings and recommendations as soon as practicable after Sept. 30, 1991, prohibited Secretary from providing any guaranteed loans after Sept. 30, 1991, except pursuant to a commitment entered into on or before such date, and excluded applicability of subsec. (d) of this section and second sentence of section 1487(e) of this title to loan demonstration.
Prohibition on Acceptance of Prepayment of Certain Loans
Pub. L. 100–71, title I, July 11, 1987, 101 Stat. 428, as amended by Pub. L. 100–122, §2(d), 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, provided that: "The limitations on loan prepayments contained in section 634 of the Agriculture, Rural Development, and Related Agencies Appropriations Act, 1987 [section 101(a) [title VI, §634] of Pub. L. 99–500 and 99–591, set out below] shall remain in effect through March 15, 1988."
Pub. L. 99–500, §101(a) [title VI, §634], Oct. 18, 1986, 100 Stat. 1783, 1783–34, and Pub. L. 99–591, §101(a) [title VI, §634], Oct. 30, 1986, 100 Stat. 3341, 3341–34, provided that: "Notwithstanding any other provision of law, including section 502(c)(2) of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) [subsec. (c)(2) of this section], none of the funds appropriated under this or any other Act shall be used prior to June 30, 1987 to accept prepayment of any loan made under section 515 of the Housing Act of 1949 [section 1485 of this title], unless such loan was made at least twenty years prior to the date of prepayment or, for loans made before December 21, 1979, the Secretary makes a determination that a supply of adequate, comparable housing is available in the community, or that prepayment of such loans will not result in a substantial increase in rents to tenants in residence upon date of prepayment or displacement of such tenants."
Study and Report of Comparison of Construction Costs and Energy Savings Between Manufactured Homes Built Under National Manufactured Housing Safety Standards and Other Homes
Pub. L. 98–181, title I [title V, §503(b)], Nov. 30, 1983, 97 Stat. 1241, provided that: "Within 18 months from the issuance by the Secretary of Agriculture of regulations under section 502(e)(2) of the Housing Act of 1949 [subsec. (e)(2) of this section], the Secretary of Energy, in consultation with the Secretary of Housing and Urban Development and the Secretary of Agriculture, shall conduct a study and transmit to the Congress a report that compares the increased construction costs, actual annual energy use, and the projected value of energy saved over the expected life of the home or the mortgage term, whichever is shorter, of manufactured homes which are financed under titles I and II of the National Housing Act [12 U.S.C. 1702 et seq., 1707 et seq.], or under title V of the Housing Act of 1949 [this subchapter] and which are built according to national manufactured housing safety standards with other homes insured under either such Act."
Study and Report to Congress of Adverse Effects on Housing of Prepayment of Loans
Pub. L. 96–399, title V, §514(b), Oct. 8, 1980, 94 Stat. 1672, required Secretary of Agriculture to conduct a study of, and report to Congress not later than 6 months after Oct. 8, 1980, on any adverse effects the amendments made by subsection (a) [amending this section] may have on housing, particularly for the elderly and persons of low income.
1 See References in Text note below. 2 So in original. Probably should be subsection "(h)(8)".Tried the LawStack mobile app?
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