View all text of Subchapter I [§ 1702 - § 1706f]

§ 1703. Insurance of financial institutions

(a) Authority to insure financial institutions

The Secretary is authorized and empowered upon such terms and conditions as he may prescribe, to insure banks, trust companies, personal finance companies, mortgage companies, building and loan associations, installment lending companies and other such financial institutions, which the Secretary finds to be qualified by experience or facilities and approves as eligible for credit insurance, against losses which they may sustain as a result of loans and advances of credit, and purchases of obligations representing loans and advances of credit, made by them for the purpose of (i) financing alterations, repairs, and improvements upon or in connection with existing structures or manufactured homes, and the building of new structures, upon urban, suburban, or rural real property (including the restoration, rehabilitation, rebuilding, and replacement of such improvements which have been damaged or destroyed by earthquake, conflagration, tornado, hurricane, cyclone, flood, or other catastrophe), by the owners thereof or by lessees of such real property under a lease expiring not less than six months after the maturity of the loan or advance of credit; and for the purpose of (ii) financing the purchase of a manufactured home to be used by the owner as his principal residence or financing the purchase of a lot on which to place such home and paying expenses reasonably necessary for the appropriate preparation of such lot, including the installation of utility connections, sanitary facilities, and paving, and the construction of a suitable pad, or financing only the acquisition of such a lot either with or without such preparation by an owner of a manufactured home; and for the purpose of financing the preservation of historic structures, and, as used in this section, the term “historic structures” means residential structures which are registered in the National Register of Historic Places or which are certified by the Secretary of the Interior to conform to National Register criteria; and the term “preservation” means restoration or rehabilitation undertaken for such purposes as are approved by the Secretary in regulations issued by him, after consulting with the Secretary of the Interior. Other than in connection with a manufactured home or a lot on which to place such a home (or both), in no case shall the insurance granted by the Secretary under this section to any such financial institution on loans, advances of credit, and purchases made by such financial institution for such purposes exceed 10 per centum of the total amount of such loans, advances of credit, and purchases. With respect to any loan, advance of credit, or purchase, the amount of any claim for loss on any such individual loan, advance of credit or purchase paid by the Secretary under the provisions of this section to a lending institution shall not exceed 90 per centum of such loss.

After August 2, 1954, (i) the Secretary shall not enter into contracts for insurance pursuant to this section except with lending institutions which are subject to the inspection and supervision of a governmental agency required by law to make periodic examinations of their books and accounts, and which the Secretary finds to be qualified by experience or facilities to make and service such loans, advances or purchases, and with such other lending institutions which the Secretary approves as eligible for insurance pursuant to this section on the basis of their credit and their experience or facilities to make and service such loans, advances or purchases; (ii) only such items as substantially protect or improve the basic livability or utility of properties shall be eligible for financing under this section, and therefore the Secretary shall from time to time declare ineligible for financing under this s

(June 27, 1934, ch. 847, title I, § 2, 48 Stat. 1246; May 28, 1935, ch. 150, § 28, 49 Stat. 299; Aug. 23, 1935, ch. 614, title III, § 344(b), 49 Stat. 722; Apr. 3, 1936, ch. 165, § 1, 49 Stat. 1187; Apr. 17, 1936, ch. 234, § 4, 49 Stat. 1234; Apr. 22, 1937, ch. 121, § 2, 50 Stat. 71; Feb. 3, 1938, ch. 13, § 2, 52 Stat. 9; June 3, 1939, ch. 175, §§ 1, 2, 53 Stat. 804, 805; June 28, 1941, ch. 261, §§ 1–5, 55 Stat. 364, 365; May 26, 1942, ch. 319, § 13, 56 Stat. 305; Mar. 23, 1943, ch. 21, § 2, 57 Stat. 43; Oct. 15, 1943, ch. 259, §§ 3, 4, 57 Stat. 571; June 26, 1947, ch. 152, 61 Stat. 182; Aug. 10, 1948, ch. 832, title I, § 101(s), 62 Stat. 1275; July 15, 1949, ch. 338, title II, § 201(1), 63 Stat. 421; Aug. 30, 1949, ch. 524, 63 Stat. 681; Oct. 25, 1949, ch. 729, § 1(1), 63 Stat. 905; Apr. 20, 1950, ch. 94, title I, §§ 101(a), 122, 64 Stat. 48, 59; Mar. 10, 1953, ch. 5, § 1, 67 Stat. 4; Aug. 2, 1954, ch. 649, title I, §§ 101(a), 102, 68 Stat. 590; June 30, 1955, ch. 251, § 1(1), 69 Stat. 225; Aug. 11, 1955, ch. 783, title I, § 101, 69 Stat. 635; Feb. 10, 1956, ch. 33, 70 Stat. 11; Aug. 7, 1956, ch. 1029, title I, § 101, 70 Stat. 1091; Pub. L. 85–104, title I, § 105, July 12, 1957, 71 Stat. 297; Pub. L. 86–372, title I, § 101, Sept. 23, 1959, 73 Stat. 654; Pub. L. 86–788, § 2(a), Sept. 14, 1960, 74 Stat. 1028; Pub. L. 87–70, title VI, § 604(a), June 30, 1961, 75 Stat. 177; Pub. L. 88–560, title I, § 101, Sept. 2, 1964, 78 Stat. 769; Pub. L. 89–117, title II, § 202(a), title XI, § 1108(a), Aug. 10, 1965, 79 Stat. 465, 504; Pub. L. 90–19, § 1(a)(3), (d), May 25, 1967, 81 Stat. 17, 18; Pub. L. 90–448, title III, § 308, Aug. 1, 1968, 82 Stat. 509; Pub. L. 91–78, § 2(a), Sept. 30, 1969, 83 Stat. 125; Pub. L. 91–152, title I, §§ 101(a), 103(c), Dec. 24, 1969, 83 Stat. 379, 380; Pub. L. 91–432, § 1(a), Oct. 2, 1970, 84 Stat. 886; Pub. L. 91–473, § 1(a), Oct. 21, 1970, 84 Stat. 1064; Pub. L. 91–525, § 1(a), Dec. 1, 1970, 84 Stat. 1384; Pub. L. 91–609, title I, §§ 101(a), 113, Dec. 31, 1970, 84 Stat. 1770, 1773; Pub. L. 92–503, § 1(a), Oct. 18, 1972, 86 Stat. 906; Pub. L. 93–85, § 1(a), Aug. 10, 1973, 87 Stat. 220; Pub. L. 93–117, § 1(a), Oct. 2, 1973, 87 Stat. 421; Pub. L. 93–383, title III, §§ 309(a)–(d), 316(a), Aug. 22, 1974, 88 Stat. 680, 681, 685; Pub. L. 93–449, § 4(a), Oct. 18, 1974, 88 Stat. 1366; Pub. L. 94–173, § 1, Dec. 23, 1975, 89 Stat. 1027; Pub. L. 95–60, § 1(a), June 30, 1977, 91 Stat. 257; Pub. L. 95–80, § 1(a), July 31, 1977, 91 Stat. 339; Pub. L. 95–128, title II, §§ 301(a), 306, Oct. 12, 1977, 91 Stat. 1131, 1134; Pub. L. 95–406, § 1(a), Sept. 30, 1978, 92 Stat. 879; Pub. L. 95–557, title III, §§ 301(a), 320, Oct. 31, 1978,