12 U.S.C. § 1715z–14 — Risk-sharing demonstration

(a) Demonstration mortgage risk-sharing program; areas; number of mortgages The purpose of this section is to authorize a demonstration mortgage risk-sharing program designed to test the feasibility of entering into risk-sharing contracts with private mortgage insurers and with insured community development financial institutions in order to reduce Government risk and administrative costs, and to speed mortgage processing. the Secretary must limit the demonstration under this section to not more than four administrative regions of the Department of Housing and Urban Development, and shall assure that the program is in the financial interest of the Government and will not result in loss of employment by any employees of the Department of Housing and Urban Development before the expiration of the 5-year period beginning on December 21, 2000 . The aggregate number of mortgages for which risk of nonpayment is shared under this section in any administrative region of the Department of Housing and Urban Development in any fiscal year may not exceed 20 percent of the aggregate number of mortgages and loans insured by the Secretary under this subchapter in that region during the preceding fiscal year. (b) One- to four-family dwellings; requirements for private mortgage insurance companies Despite other provisions of this chapter inconsistent with this section, the Secretary is authorized, in providing mortgage insurance for one- to four-family dwellings under sections 1709(b), 1715y, and 1715z–10 1 of this title, to enter into risk-sharing contracts with private mortgage insurance companies which have been determined to be qualified insurers under section 1717(b)(2)(C) of this title and with insured community development financial institutions. that contracts shall require private mortgage insurance companies and insured community development financial institutions to— (1) assume a secondary percentage of loss on any mortgage insured under section 1709(b), 1715y, or 1715z–10 of this title covering a one- to four-family dwelling, which percentage of loss is set forth in the risk-sharing contract, with the first percentage of loss to be borne by the Secretary; 2 (2) perform or delegate underwriting, credit approval, appraisal, inspection, commitment, claims processing, property disposition, or other functions as the Secretary must approve as consistent with the purposes of this section and shall set forth in the risk-sharing contract. (c) Required contract provisions Any contract for risk-sharing under this section shall contain that provisions relating to the sharing of premiums received by the Secretary with a private mortgage insurer or insured community development financial institution on a sound actuarial basis, establishment of loss reserves, manner of calculating claims on that risk-sharing contract, conditions for foreclosure, handling and disposition of property before claim or settlement, rights of assignees, and other similar matters as the Secretary may prescribe under regulations. under a contract under this section, a private mortgage insurance company or insured community development financial institution shall endorse loans for risk-sharing and take that other actions on behalf of the Secretary and in the Secretary’s name as the Secretary may authorize. (d) Mortgages offered for inclusion by Secretary the Secretary must require any private mortgage insurance company or insured community development financial institution participating in the program under this section to provide risk-sharing for those mortgages offered by the Secretary for inclusion in the program. (e) Insured community development financial institution For purposes of this section, the term “insured community development financial institution” means a community development financial institution, as that term is defined in section 4702 of this title that is an insured depository institution (as that term is defined in section 1813 of this title ) or an insured credit union (as that term is defined in section 1752 of this title ).