12 U.S.C. § 1715u — Authority to assist mortgagors in default

(a) Loss mitigation. When a mortgage insured under this subchapter is in default or imminent default, as the Secretary defines those terms, the mortgagee must take loss-mitigation actions to provide an alternative to foreclosure. Required actions may include special forbearance, loan modification, preforeclosure sale, help with housing counseling, subordinate-lien resolution, borrower incentives, and a deed in lieu of foreclosure. They do not include assigning the mortgage to the Secretary under section 1710(a)(1)(A) or subsection (c). (b) Partial claims. (1) The Secretary may create a program to pay a partial claim to a mortgagee that applies the claim to a one-to-four-family home mortgage in default or imminent default. (2) The Secretary alone decides whether to pay and sets acceptable terms. The payment cannot exceed 30 percent of unpaid principal plus Secretary-approved costs; it must first cover arrears and may reduce principal; the borrower must agree to repay the claim to the Secretary on acceptable terms; the Secretary may compensate the mortgagee for lost monthly-payment income caused by a lower interest rate; partial-claim or modification expenses cannot be charged to the borrower; the mortgage term may be extended to 40 years from modification; and the Secretary may pay the mortgagee, for the borrower, an incentive based on successful modified-mortgage performance, to reduce principal. (3) The Secretary may pay the mortgagee from the proper insurance fund for activities required to collect the borrower’s repayment. (c) Assignment and loan modification. (1)(A) The Secretary may create a program for a mortgagee to assign to the Secretary, on request, a chapter-insured mortgage on a one-to-four-family home. (B) The Secretary may accept it only if it is in default or imminent default; the mortgagee modified it to cure the default and make payments reasonably affordable to the borrower at no more than current market interest rates; and the Secretary arranges servicing by a mortgagee, which may be the assigning mortgagee, in the insurance fund’s best interests. (C) On accepting assignment, the Secretary may pay the mortgagee from the proper fund an amount the Secretary finds appropriate, not exceeding what compensates for assignment and modification losses and expenses. (2)(A) The Secretary may encourage modifications of eligible delinquent or imminently defaulting mortgages through insurance benefits, assignment, and later modification under a mortgagee-approved plan. (B) The Secretary may pay benefits under section 1710(a)(5), without reducing them for modified amounts, only after all rights, interests, claims, evidence, and records described in section 1710(a)(1)(A)(i) through (iv) are assigned, transferred, and delivered to the Secretary. (C) After modification, the Secretary may insure the mortgage under this subchapter and may later reassign it on agreed terms, act as or hire an entity to act as a Government National Mortgage Association issuer to pool it into a security, or resell it under a Federal program for buying such insured mortgages. The Secretary may coordinate modification interest-rate reductions with rates for those purchases. (D) The Secretary may require the existing servicer to continue servicing the assigned mortgage as the Secretary’s agent while the Secretary holds it for modification, with compensation set by the Secretary and consistent as much as possible with section 1709(b). After resale, the Secretary may let that servicer continue or hire another servicer. (d) No judicial review. A decision to use or not use any authority under this section cannot be reviewed by a court. (e) Repealed. (f) Other laws. Nothing in this chapter or another law requires the Secretary to provide a foreclosure alternative for a mortgagee with a Secretary-insured one-to-four-family mortgage or to accept assignment of such a mortgage.