12 USC 1715u - Authority to assist mortgagors in default

U.S Code last checked for updates: Jul 27, 2025

§ 1715u.

Authority to assist mortgagors in default

(a)

Loss mitigation

(b)

Payment of partial claim

(1)

Establishment of program

(2)

Payments and exceptions

Any payment of a partial claim under the program established in paragraph (1) to a mortgagee shall be made in the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that—

(A)

the amount of the payment shall be in an amount determined by the Secretary, not to 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 first be applied to any arrearage on the mortgage, and may also be applied to achieve principal reduction;

(C)

the mortgagor shall agree to repay the amount of the insurance claim to the Secretary upon terms and conditions acceptable to the Secretary;

(D)

the Secretary may permit compensation to the mortgagee for lost income on monthly payments, due to a reduction in the interest rate charged on the mortgage;

(E)

expenses related to the partial claim or modification may not be charged to the borrower;

(F)

loans may be modified to extend the term of the mortgage to a maximum of 40 years from the date of the modification; and

(G)

the Secretary may permit incentive payments to the mortgagee, on the borrower’s behalf, based on successful performance of a modified mortgage, which shall be used to reduce the amount of principal indebtedness.

(3)

Payments in connection with certain activities

(c)

Assignment and loan modification

(1)

Assignment

(A)

Program authority

(B)

Program requirements

The Secretary may accept assignment of a mortgage under this paragraph only if—

(i)

the mortgage was in default or facing imminent default, as defined by the Secretary;

(ii)

the mortgagee has modified the mortgage to cure the default and provide for mortgage payments within the reasonable ability of the mortgagor 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 insurance fund.

(C)

Payment of insurance benefits

(2)

Assignment and loan modification

(A)

Authority

(B)

Payment of benefits and assignment

(C)

Disposition

After modification of a mortgage pursuant to this paragraph, the Secretary may provide insurance under this subchapter 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.

(D)

Loan servicing

(d)

Prohibition of judicial review

(e)

Repealed. Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327

(f)

Applicability of other laws

(June 27, 1934, ch. 847, title II, § 230, as added Pub. L. 86–372, title I, § 114(a), Sept. 23, 1959, 73 Stat. 662; amended Pub. L. 88–560, title I, § 104(b), Sept. 2, 1964, 78 Stat. 770; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 96–399, title III, § 341, Oct. 8, 1980, 94 Stat. 1659; Pub. L. 98–181, title I [title IV, § 418], Nov. 30, 1983, 97 Stat. 1212; Pub. L. 100–242, title IV, § 428, Feb. 5, 1988, 101 Stat. 1918; Pub. L. 102–83, § 5(c)(2), Aug. 6, 1991, 105 Stat. 406; Pub. L. 104–99, title IV, § 407(b), Jan. 26, 1996, 110 Stat. 45; Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 105–276, title VI, § 601(f), Oct. 21, 1998, 112 Stat. 2674; Pub. L. 111–22, div. A, title II, § 203(d)(1)–(3), May 20, 2009, 123 Stat. 1645, 1646.)

cite as: 12 USC 1715u