12 U.S.C. § 1746 — Insurance on mortgages on large-scale housing projects
submitted 92 years ago by ch. 847 to r/title-12-BANKS-AND-BANKING · 823 words · no verdicts yet
The Secretary may insure mortgages for large housing projects using modern, cost-saving construction. The section sets eligibility, loan limits, interest, occupancy preferences, and related rules.
(a) The Secretary may insure mortgages, including construction advances, to encourage large-scale modernized site construction and industrially produced homes. (b) A mortgage* must: (1) be made to and held by a Secretary-approved, responsible mortgagee*; (2) cover Secretary-approved property and a Secretary-approved mortgagor*, with at least 25 family dwelling units in a group of approved single-family homes. A fabrication or storage plant may be on the property during construction, and the Secretary may release it from the lien on approved terms; (3) have principal no more than 85 percent of the Secretary’s estimated completed value, excluding that plant, and no more than $5,950 or 85 percent of valuation, whichever is less, for each home. If sound three- or four-bedroom construction is not feasible within that limit, the Secretary may add up to $850 for each bedroom over two, but no home may exceed $7,650. Construction advances may cover materials delivered and labor performed; (4) be fully amortized by periodic payments within the Secretary’s term and bear no more than 4 percent annual interest, excluding insurance premiums. With Treasury approval, regulations may raise the maximum to 4½ percent if the mortgage market requires it. The Secretary may approve partial lien releases, and the mortgage may be replaced after completion by individual mortgages. Each individual mortgage may be insured under this section, with the builder or the owner-occupant as mortgagor; an owner-occupant mortgage may have the principal, term, and interest allowed by section 1709(b)(2)(D). (c) Regulations must give veterans of World War II, their immediate families, and Secretary-defined hardship cases preference or priority for occupancy. (d) The listed provisions of sections 1743 and 1739 apply to these project and individual mortgages as specified.
In addition to mortgages insured under other sections of this subchapter, and in order to assist and encourage the application of cost-reduction techniques through large-scale modernized site construction of housing and the erection of houses produced by modern industrial processes, the Secretary is authorized to insure mortgages (including advances on such mortgages during construction) which are eligible for insurance as hereinafter provided.
To be eligible for insurance under this section, a mortgage* shall—
have been made to and be held by a mortgagee* approved by the Secretary as responsible and able to service the mortgage properly;
cover property, held by a mortgagor* approved by the Secretary, upon which there is to be constructed or erected dwelling units for not less than twenty-five families consisting of a group of single-family dwellings approved by the Secretary for mortgage insurance prior to the beginning of construction: Provided, That during the course of construction there may be located upon the mortgaged property a plant for the fabrication or storage of such dwellings or sections or parts thereof, and the Secretary may consent to the removal or release of such plant from the lien of the mortgage upon such terms and conditions as he may approve;
involve a principal obligation in an amount—
not to exceed 85 per centum of the amount which the Secretary estimates will be the value of the completed property or project, exclusive of any plant of the character described in paragraph (2) of this subsection located thereon, and
not to exceed a sum computed on the individual dwellings comprising the total project as follows: $5,950 or 85 per centum of the valuation, whichever is the lower amount, with respect to each single-family dwelling: Provided, That if the Secretary finds that it is not feasible, within the dollar amount limitation in this clause on the principal obligation of the mortgage, to construct dwellings containing three or four bedrooms without sacrifice of sound standards of construction, design, and livability, he may increase such dollar amount limitation by not exceeding $850 for each additional bedroom (as defined by the Secretary) in excess of two contained in each such dwelling if he finds that such dwelling meets sound standards of design and livability as a three-bedroom unit or a four-bedroom unit, as the case may be, but the amount computed under this clause for each such dwelling shall not exceed, in any event, $7,650.
With respect to the insurance of advances during construction, the Secretary is authorized to approve advances by the mortgagee to cover the cost of materials delivered upon the mortgaged property and labor performed in the fabrication or erection thereof;
provide for complete amortization by periodic payments within such term as the Secretary shall prescribe and shall bear interest (exclusive of premium charges for insurance) as not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time: Provided, That the Secretary with the approval of the Secretary of the Treasury, may prescribe by regulation a higher maximum rate of interest, not exceeding 4½ per centum per annum on the amount of the principal obligation outstanding at any time, if he finds that the mortgage market demands it. The Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such release, and the mortgage may provide that, upon the completion of the construction of the project, such mortgage may be replaced by individual mortgages covering each individual dwelling in the project. Each such individual mortgage may be insured under this section with the mortgagor being either the builder who constructed the dwellings or the owner and occupant of the dwelling at the time, and where the mortgagor is the owner and occupant, may involve a principal obligation in such amount and have such maturity and interest rate as a mortgage eligible for insurance under section 1709(b)(2)(D) of this title.
Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families and for hardship cases as defined by the Secretary shall be provided under such regulations and procedures as may be prescribed by the Secretary.
The provisions of subsections (c), (d), (e), and (f) of section 1743 of this title shall be applicable to mortgages insured under this section covering a project described in subsection (b) of this section, and the provisions of subsections (a) to (f), and (h) of section 1739 of this title shall be applicable to the individual mortgages insured pursuant to subsection (b)(4) of this section covering individual dwellings in the project.
Source credit: (June 27, 1934, ch. 847, title VI, § 611, as added Aug. 10, 1948, ch. 832, title I, § 101(f), 62 Stat. 1271; amended Apr. 20, 1950, ch. 94, title I, §§ 121, 122, 64 Stat. 58, 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
- 1934Enacted · Act of June 27, 1934, ch. 847 · 62 Stat. 1271
- 1950Amended · Act of Apr. 20, 1950, ch. 94 · 64 Stat. 58, 59
- 1967Amended · Pub. L. 90-19 · 81 Stat. 17
A history note hasn’t been published yet. The record shows enactment by ch. 847 on 1934-06-27.
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