View all text of Subchapter III [§ 1471 - § 1490t]
§ 1487. Rural Housing Insurance Fund
(a) Authority to make and insure loans for housing and buildings on adequate farms; amounts
(b) Authority to make and insure loans for housing and related facilities for domestic farm labor and elderly persons; transfer of notes, contracts, and mortgages from Agricultural Credit Insurance Fund; compensation
(c) Use of funds from Rural Housing Insurance Fund for loans; sale of insured and guaranteed loans to public
(d) Authority to insure payment of interest and principal; liens; assignability of notes evidencing loans; interest subsidy on insured and guaranteed loans offered for sale to public; protection of borrowers under loans sold to public
(1) The Secretary may, in conformity with subsections (a), (b), and (m), insure the payment of principal and interest on loans made by lenders other than the United States, and on loans made from or otherwise acquired by the Rural Housing Insurance Fund which are sold by the Secretary. Any contract of insurance executed by the Secretary hereunder shall be an obligation supported by the full faith and credit of the United States, and shall be incontestable except for fraud or material misrepresentation of which the holder has actual knowledge. In connection with loans insured under this section, the Secretary may take liens running to the United States notwithstanding the fact that the notes evidencing such loans may be held by lenders other than the United States. Notes evidencing such loans shall be freely assignable, but the Secretary shall not be bound by any such assignment until notice thereof is given to and acknowledged by him.
(2) Each loan made by the Secretary or other lenders under this subchapter that is insured or guaranteed in accordance with this subsection shall, when offered for sale to the public, be accompanied by an agreement by the Secretary to pay to the holder of such loan (through an agreement to purchase such loan or through such other means as the Secretary determines to be appropriate) the difference between the rate of interest paid by the borrower of such loan and the market rate of interest (as determined by the Secretary) on obligations having comparable periods to maturity on the date of such sale.
(3) Each loan made by the Secretary or other lenders under this subchapter that is insured or guaranteed in accordance with this subsection shall, when offered for sale to the public, be accompanied by agreements for the benefit of the borrower under the loan that provide that—
(A) the purchaser or any assignee of the loan shall not diminish any substantive or procedural right of the borrower arising under this subchapter;
(B) upon any substantial default of the borrower, but prior to foreclosure, the loan shall be assigned to the Secretary for the purpose of avoiding foreclosure; and
(C) following any assignment under subparagraph (B) and before commencing any action to foreclose or otherwise dispossess the borrower, the Secretary shall afford the borrower all substantive and procedural rights arising under this subchapter, including consideration for interest subsidy, moratorium, reamortization, refinancing, and appeal of any adverse decision to an impartial officer.
(4) From the proceeds of loan sales under paragraph (2), the Secretary shall set aside as a reserve against future losses not less than 5 percent of the outstanding face amount of the loans held by the public at any time.
(e) Rural Housing Insurance Fund; creation; authorization of appropriations; separate operation of guaranteed and insured loan programs: transfer of funds
(f) Investment of excess Fund moneys
(g) Fund assets and liabilities; sale of loans; agreements for servicing and purchasing loans
(h) Issuance of notes; form and denominations; interest rate; purchase by Secretary of the Treasury; debt transactions
(i) Retention of annual charge; administrative expenses; merger of funds
(j) Additional uses of Fund moneysThe Secretary may also utilize the Fund—
(1) to pay amounts to which the holder of the note is entitled in accordance with an insurance or sale agreement under this section accruing between the date of any payment by the borrower to the Secretary and the date of transmittal of any such payments to the holder of the note; and in the discretion of the Secretary, payments other than final payments need not be remitted to the holder until due or until the next agreed annual or semiannual remittance date;
(2) to pay the holder of any note insured under this section any defaulted installment or, upon assignment of the note to the Secretary at the Secretary’s request, or pursuant to a purchase agreement, the entire balance outstanding on the note;
(3) to pay taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, and other services customary in the industry, independent audits of project expenses, construction inspections, commercial appraisals, servicing of loans, and other related program services and expenses, and other expenses and advances to protect the security for loans which are insured under this section or held in the Fund, and to acquire such security property at foreclosure sale or otherwise;
(4) to make assistance payments authorized by section 1490a(a) of this title;
(5) after October 1, 1977, and as approved in appropriations Acts, to make advances authorized by section 1471(e) of this title;
(6) to make payments and take other actions in accordance with agreements entered into under paragraphs (2) and (3) of subsection (d); and
(7) to provide advances and assistance required to carry out paragraphs (4) and (5) of
(k) Sale of loans as sale of assets
(l) Commitments to make or insure loans to lenders, builders, or sellers; terms and conditions
(m) Transfer of assets, liabilities, and authorizations of Rural Housing Direct Loan Account to Fund; abolition of Account; applicability of provisions
(n) Purchase of eligible residential properties
(o) Rules to encourage rehabilitation or purchase of existing buildings; regulations to facilitate marketability of insured or guaranteed loans in secondary mortgage market
(1) The Secretary shall promulgate rules which encourage the rehabilitation or purchase of existing buildings for the purpose of providing housing which is economical in cost and operation.
(2) Not later than the expiration of the 90-day period following April 7, 1986, the Secretary shall issue regulations to facilitate the marketability in the secondary mortgage market of loans insured or guaranteed under this section. Such regulations shall ensure that such loans are competitive with other loans and mortgages insured or guaranteed by the Federal Government.
(July 15, 1949, ch. 338, title V, § 517, as added Pub. L. 89–117, title X, § 1003(a), Aug. 10, 1965, 79 Stat. 498; amended Pub. L. 89–754, title VIII, § 806, Nov. 3, 1966, 80 Stat. 1282; Pub. L. 91–78, § 1, Sept. 30, 1969, 83 Stat. 125; Pub. L. 91–152, title IV, § 413(a)–(e)(2), (f)(2), Dec. 24, 1969, 83 Stat. 398–400; Pub. L. 91–609, title VIII, § 803(d), Dec. 31, 1970, 84 Stat. 1807; Pub. L. 93–117, § 13(c), Oct. 2, 1973, 87 Stat. 423; Pub. L. 93–383, title V, §§ 505(c), 509(b), 514(c), 516(b), 517, 519(b), Aug. 22, 1974, 88 Stat. 694–696, 698, 699; Pub. L. 95–60, § 4(c), June 30, 1977, 91 Stat. 258; Pub. L. 95–80, § 4(c), July 31, 1977, 91 Stat. 340; Pub. L. 95–128, title V, §§ 501(c), 502(b), (c), 506, 509, Oct. 12, 1977, 91 Stat. 1139–1141; Pub. L. 95–406, § 7(c), Sept. 30, 1978, 92 Stat. 881; Pub. L. 95–557, title V, §§ 501(f), 506(b), Oct. 31, 1978, 92 Stat. 2111, 2113; Pub. L. 96–71, § 5(c), Sept. 28, 1979, 93 Stat. 502; Pub. L. 96–105, § 5(c), Nov. 8, 1979, 93 Stat. 795; Pub. L. 96–153, title V, §§ 501(g), 511, Dec. 21, 1979, 93 Stat. 1134, 1137; Pub. L. 96–372, § 6(c), Oct. 3, 1980, 94 Stat. 1364; Pub. L. 96–399, title V, §§ 501(c), 511, Oct. 8, 1980, 94 Stat. 1668, 1671; Pub. L. 97–35, title III, § 351(c), Aug. 13, 1981, 95 Stat. 421; Pub. L. 97–289, § 3(b), Oct. 6, 1982, 96 Stat. 1231; Pub. L. 98–35, § 3(b), May 26, 1983, 97 Stat. 198; Pub. L. 98–109, § 4(b), Oct. 1, 1983, 97 Stat. 746; Pub. L. 98–181, title I [title V, §§ 511(c), 514], Nov. 30, 1983, 97 Stat. 1244, 1247; Pub. L. 98–479, title I, § 105(f), title II, § 203(d)(5), (6), Oct. 17, 1984, 98 Stat. 2227, 2230; Pub. L. 99–272, title III, § 3006, Apr. 7, 1986, 100 Stat. 103; Pub. L. 100–242, title II, § 243, Feb. 5, 1988, 101 Stat. 1890; Pub. L. 101–73, title V, § 501(e)(2), Aug. 9, 1989, 103 Stat. 394; Pub. L. 102–550, title VII, § 707(g), Oct. 28, 1992, 106 Stat. 3839.)