12 U.S.C. § 1715z–6 | Supplemental loans for multifamily projects

(a)

Authorization to insure; “supplemental loan” defined

ProvidedWith respect to a multifamily project, hospital, or group practice facility covered by a mortgage insured under any section or subchapter of this chapter or covered by a mortgage held by the Secretary, the Secretary is authorized, upon such terms and conditions as he may prescribe, to make commitments to insure, and to insure, supplemental loans (including advances during construction or improvement) made by financial institutions approved by the Secretary. As used in this section, “supplemental loan” means a loan, advance of credit, or purchase of an obligation representing a loan or advance of credit made for the purpose of financing improvements or additions to such project, hospital, or facility: , That a loan involving a nursing home, hospital, or a group practice facility may also be made for the purpose of financing equipment to be used in the operation of such nursing home, hospital, or facility.

(b)

Eligibility for insurance

To be eligible for insurance under this section, a supplemental loan shall—

(1)

be limited to 90 per centum of the amount which the Secretary estimates will be the value of such improvements, additions, and equipment, except that such amount when added to the outstanding balance of the mortgage covering the project or facility, shall not exceed the maximum mortgage amount insurable under the section or subchapter pursuant to which the mortgage covering such project or facility is insured or an amount acceptable to the Secretary;

(2)

have a maturity satisfactory to the Secretary;

(3)

bear interest at such rate as may be agreed upon by the borrower and the financial institution;

(4)

be secured in such manner as the Secretary may require;

(5)

section 1715c of this title be governed by the labor standards provisions of that are applicable to the section or subchapter pursuant to which the mortgage covering the project or facility is insured or pursuant to which the original mortgage covering the project or facility was insured; and

(6)

contain such other terms, conditions, and restrictions as the Secretary may prescribe.

(c)

Applicability of other provisions of law

lsection 1713 of this title section 1715e of this title section 1715z–1 of this titleThe provisions of subsections (d), (e), (g), (h), (i), (j), (k), (), and (n) of shall be applicable to loans insured under this section, except that (1) all references to the term “mortgage” shall be construed to refer to the term “loan” as used in this section, (2) loans involving projects covered by a mortgage insured under that is the obligation of the Cooperative Management Housing Insurance Fund shall be insured under and shall be the obligation of such fund, and (3) loans involving projects covered by a mortgage insured under shall be insured under and shall be the obligation of the Special Risk Insurance Fund.

(d)

Authorization to insure loans for improvements or additions; terms and conditions; limitation on amount

section 1713(k) of this titleNotwithstanding the foregoing, the Secretary may insure a loan for improvements or additions to a multifamily housing project, or a group practice or medical practice facility or hospital or other health facility approved by the Secretary, which is not covered by a mortgage insured under this chapter, if he finds that such a loan would assist in preserving, expanding, or improving housing opportunities, or in providing protection against fire or other hazards. Such loans shall have a maturity satisfactory to the Secretary and shall meet such other conditions as the Secretary may prescribe. In no event shall such a loan be insured if it is for an amount in excess of the maximum amount which could be approved if the outstanding indebtedness, if any, covering the property were a mortgage insured under this chapter. At any sale under foreclosure of a mortgage on a project or facility which is not insured under this chapter but which is senior to a loan assigned to the Secretary pursuant to subsection (c), the Secretary is authorized to bid, in addition to amounts authorized under , any sum up to but not in excess of the total unpaid indebtedness secured by such senior mortgage, plus taxes, insurance, foreclosure costs, fees, and other expenses. In the event that, pursuant to subsection (c), the Secretary acquires title to, or is assigned, a loan covering a project or facility which is subject to a mortgage which is not insured under this chapter, the Secretary is authorized to make payments from the General Insurance Fund on the debt secured by such mortgage, and to take such other steps as the Secretary may deem appropriate to preserve or protect the Secretary’s interest in the project or facility.

(e)

Loan insurance for energy conserving improvements and solar energy systems

(1)

section 1703(a) of this title section 1703(a) of this title Notwithstanding any other provision of this section, the Secretary may insure a loan for purchasing and installing energy conserving improvements (as defined in subparagraph (2) of the last paragraph of ), for purchasing and installing a solar energy system (as defined in subparagraph (3) of the last paragraph of ), and for purchasing or installing (or both) individual utility meters in a multifamily housing project if such meters are purchased or installed in connection with other energy conserving improvements or with a solar energy system or the project meets minimum standards of energy conservation established by the Secretary, without regard to whether the project is covered by a mortgage under this chapter.

(2)

Notwithstanding the provisions of subsection (b), a loan insured under this subsection shall—

(A)

not exceed an amount which the Secretary determines is necessary for the purchase and installation of individual utility meters plus an amount which the Secretary deems appropriate taking into account amounts which will be saved in operation costs over the period of repayment of the loan by reducing the energy requirements of the project as a result of the installation of energy conserving improvements or a solar energy system therein;

(B)

section 1715z–1 of this titlel be insured for 90 percent of any loss incurred by the person holding the note for the loan; except that, for cooperative multifamily projects receiving assistance under or financed with a below market interest rate mortgage insured under section 1715(d)(3) of this title, 100 percent of any such loss may be insured;

(C)

bear an interest rate not to exceed an amount which the Secretary determines, after consulting with the Secretary of Energy, to be necessary to meet market demands;

(D)

have a maturity satisfactory to the Secretary;

(E)

be insured pursuant to a premium rate established on a sound actuarial basis to the extent practicable;

(F)

be secured in such manner as the Secretary may require;

(G)

be an acceptable risk in that energy conservation or solar energy benefits to be derived outweigh the risks of possible loss to the Federal Government; and

(H)

contain such other terms, conditions, and restrictions as the Secretary may prescribe.

(3)

The provisions of subsection (c) shall apply to loans insured under this subsection.

(4)

The Secretary shall provide that any person obligated on the note for any loan insured under this section be regulated or restricted, until the termination of all obligations of the Secretary under the insurance, by the Secretary as to rents or sales, charges, capital structure, rate of return, and methods of operations of the multifamily project to such an extent and in such manner as to provide reasonable rentals to tenants and a reasonable return on the investment.

(f)

Pub. L. 104–204, title IISept. 26, 1996110 Stat. 2885 Repealed. , ,

(g)

Extension of rental assistance for term of loan

(1)

When underwriting a rehabilitation loan under this section in connection with eligible multifamily housing, the Secretary may assume that any rental assistance provided for purposes of servicing the additional debt will be extended for the term of the rehabilitation loan. The Secretary shall exercise prudent underwriting practices in insuring rehabilitation loans under this section. For purposes of this subsection, the term “eligible multifamily housing” means any housing financed by a loan or mortgage that is—

(A)

lsection 1701s of this title section 1437f of title 42 insured or held by the Secretary under section 1715(d)(3) of this title and assisted under or ;

(B)

l insured or held by the Secretary and bears interest at a rate determined under the proviso of section 1715(d)(5) of this title; or

(C)

section 1715z–1 of this title insured, assisted or held by the Secretary under .

(2)

A mortgagee approved by the Secretary may not withhold consent to a rehabilitation loan insured in connection with eligible multifamily housing on which that mortgagee holds a mortgage.

June 27, 1934, ch. 847 Pub. L. 90–448, title III, § 307Aug. 1, 196882 Stat. 508 Pub. L. 91–609, title I, § 111Dec. 31, 197084 Stat. 1772 Pub. L. 93–383, title III, § 313Aug. 22, 197488 Stat. 684 Pub. L. 94–375, § 5Aug. 3, 197690 Stat. 1070 Pub. L. 95–557, title III, § 311(b)Oct. 31, 197892 Stat. 2098 Pub. L. 95–619, title II, § 247Nov. 9, 197892 Stat. 3234 Pub. L. 96–153, title III, § 319Dec. 21, 197993 Stat. 1119 Pub. L. 96–399, title III, § 314Oct. 8, 198094 Stat. 1645 Pub. L. 98–181, title INov. 30, 198397 Stat. 1210 Pub. L. 98–479, title II, § 204(a)(11)Oct. 17, 198498 Stat. 2232 Pub. L. 100–242, title II, § 231Feb. 5, 1988101 Stat. 1884 Pub. L. 101–235, title IIDec. 15, 1989103 Stat. 2038 Pub. L. 101–625, title VI, § 602(a)Nov. 28, 1990104 Stat. 4275 Pub. L. 102–550, title IIIOct. 28, 1992106 Stat. 3771 Pub. L. 104–204, title IISept. 26, 1996110 Stat. 2885(, title II, § 241, as added , , ; amended , , ; , , ; , , ; , , ; , , ; , , ; , , ; [title IV, § 404(b)(14)], , ; , (12), , ; , title IV, § 429(c), , , 1918; , §§ 203(c), (d), 204(b), , , 2039; , , ; , §§ 316(a), (b), 317(c), , , 3772; , , .)

Editorial Notes

References in Text

act June 27, 1934, ch. 847 48 Stat. 1246This chapter, referred to in subsecs. (a), (d), and (e)(1), was in the original “this Act”, meaning , , which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.

Amendments

Pub. L. 104–2041996—Subsec. (f). struck out subsec. (f), which related to insurance for second mortgage financing.

Pub. L. 102–550, § 316(a)(1)1992—Subsec. (f)(2)(B)(i). , inserted “the amount of rehabilitation costs required by the plan of action and related charges and” after “equal to”.

Pub. L. 102–550, § 317(c)(1)Subsec. (f)(2)(B)(ii). , struck out “and” at end.

Pub. L. 102–550, § 316(a)(2)Subsec. (f)(3)(B). , inserted “and the amount of rehabilitation costs required by the plan of action and related charges and” after “1990”.

Pub. L. 102–550, § 316(a)(3)(B)Subsec. (f)(5)(A). , added subpar. (A) and struck out former subpar. (A) which read as follows: “have a maturity and provisions for amortization satisfactory to the Secretary, bear interest at such rate as may be agreed upon by the mortgagor and mortgagee, and be secured in such manner as the Secretary may require; and”.

Pub. L. 102–550, § 316(a)(3)Subsec. (f)(5)(B), (C). , added subpar. (B) and redesignated former subpar. (B) as (C).

Pub. L. 102–550, § 317(c)(2)Pub. L. 102–550, § 316(a)(5)Subsec. (f)(6). , which directed the substitution of “acquisition loan” for “acquisiton loan” in par. (7), was executed by making the substitution in par. (6) to reflect the probable intent of Congress and the intervening redesignation of par. (7) as (6) by . See below.

Pub. L. 102–550, § 316(a)(4), (5), redesignated par. (7) as (6) and struck out former par. (6) which read as follows: “The Secretary may provide for combination of loans insured under subsection (d) of this section with equity and acquisition loans insured under this subsection.”

Pub. L. 102–550, § 316(a)(5)Subsec. (f)(7) to (9). , redesignated pars. (7) to (9) as (6) to (8), respectively.

Pub. L. 102–550, § 316(b)Subsec. (f)(10). , added par. (10).

Pub. L. 101–625 section 1713 of this title1990—Subsec. (f). amended subsec. (f) generally, substituting present provisions for provisions relating to insurance of “equity loans” under the Emergency Low Income Housing Preservation Act of 1987, providing for eligibility for such insurance, providing that a qualified nonprofit organization or limited equity tenant cooperative corporation may constitute an owner of housing for purposes of receiving an insured loan, providing for applicability of certain provisions of , and providing that an approved mortgagee may not withhold consent to an equity loan on property on which mortgagee holds a mortgage.

Pub. L. 101–235, § 203(c)(1)1989—Subsec. (f)(2). , inserted at end “When underwriting an equity loan under this subsection, the Secretary may assume that the rental assistance provided in accordance with an approved plan of action under section 225(b) of the Emergency Low Income Housing Preservation Act of 1987 will be extended for the full term of the contract entered into under section 225(c) of that Act. The Secretary may accelerate repayment of a loan under this section in the event rental assistance is not extended under section 225(c) of that Act or the Secretary is unable to develop a revised package of incentives to the owner comparable to those received under the original approved plan of action.”

Pub. L. 101–235, § 203(c)(2)Subsec. (f)(3). , inserted “public entity,” after “A”.

Pub. L. 101–235, § 203(d)Subsec. (f)(6). , added par. (6).

Pub. L. 101–235, § 204(b)Subsec. (g). , added subsec. (g).

Pub. L. 100–242, § 231Subsec. (f). , added subsec. (f).

Pub. L. 98–479, § 204(a)(11)1984—Subsec. (a). , substituted “to make” for “to made”.

Pub. L. 98–479, § 204(a)(12)Subsec. (b)(1). , substituted “or facility” for “of facility” before “is insured”.

Pub. L. 98–1811983—Subsec. (b)(3). substituted provision that the interest rate be such a rate as agreed upon by the mortgagor and the mortgagee for provision that the interest rate, exclusive of premium charges for insurance and service charges, not exceed such per centum per annum, not in excess of 6 per centum, on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet market conditions.

Pub. L. 96–3991980—Subsec. (e)(1). inserted provisions respecting requirements for purchase or installation in connection with other energy conserving improvements, etc.

Pub. L. 96–1531979—Subsec. (b)(2). struck out “but not to exceed the remaining term of the mortgage” after “the Secretary”.

Pub. L. 95–5571978—Subsec. (d). inserted provision relating to the amounts the Secretary is authorized to bid at any sale under foreclosure of a mortgage on a project or facility which is not insured under this chapter but which is senior to a loan assigned to the Secretary pursuant to subsection (c), and such other steps the Secretary is authorized to take to preserve or protect his interest in the project or facility.

Pub. L. 95–619Subsec. (e). added subsec. (e).

Pub. L. 94–3751976—Subsec. (a). inserted “, hospital,” after “multifamily project”, “additions to such project”, “involving a nursing home”, and “of such nursing home”.

Pub. L. 93–3831974—Subsec. (d). added subsec. (d).

Pub. L. 91–609, § 111(1)section 1715w of this title1970—Subsec. (a). , (2), inserted in first sentence “or covered by a mortgage held by the Secretary” after “this chapter” and substituted in proviso “a nursing home or a group practice facility” for “a nursing home covered by a mortgage insured under or a loan involving a group practice facility covered by a mortgage insured under subchapter IX–B of this chapter”, respectively.

Pub. L. 91–609, § 111(3)Subsec. (b)(1). , inserted “or an amount acceptable to the Secretary” before semicolon at end.

Pub. L. 91–609, § 111(4)Subsec. (b)(5). , inserted “or pursuant to which the original mortgage covering the project or facility was insured” before semicolon at end.

Statutory Notes and Related Subsidiaries

Effective Date of 1988 Amendment

section 231 of Pub. L. 100–242Nov. 1, 1987section 235 of Pub. L. 100–242Amendment by applicable to any project that is eligible low income housing on or after , see .

Regulations

Pub. L. 102–550, title III, § 316(c)Oct. 28, 1992106 Stat. 3771Oct. 28, 19925 U.S.C. 553, , , directed Secretary, not later than the expiration of 45-day period beginning on , to issue regulations implementing subsec. (f)(1) of this section and provided that such regulations are not subject to requirements of .

Insurance for Second Mortgage Financing Not To Be Offered as Incentive Under LIHPRHA and ELIHPA

12 U.S.C. 4101 Pub. L. 100–242, title IIFeb. 5, 1988101 Stat. 1877 Pub. L. 104–204 section 4101 of this titleInsurance for second mortgage financing provided under former subsec. (f) of this section not to be offered as incentive under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 ( et seq.) and the Emergency Low Income Housing Preservation Act of 1987 (, , , as amended), see title II in part of , set out as a Low-Income Housing Preservation note under .

Delegation of Processing of Mortgage Insurance

section 328 of Pub. L. 101–625 section 1713 of this titleSecretary of Housing and Urban Development to implement system of mortgage insurance for mortgages insured under this section that delegates processing functions to selected approved mortgagees, with Secretary to retain authority to approve rents, expenses, property appraisals, and mortgage amounts and to execute firm commitments, see , set out as a note under .