12 U.S.C. § 1454 : US Code - Section 1454: Purchase and sale of mortgages; residential mortgages; conventional mortgages; terms and conditions of sale or other disposition; authority to enter into, perform, and carry out transactions

Search 12 U.S.C. § 1454 : US Code - Section 1454: Purchase and sale of mortgages; residential mortgages; conventional mortgages; terms and conditions of sale or other disposition; authority to enter into, perform, and carry out transactions

(a) Authority for purchase and sale; residential mortgages;
conventional mortgages; terms and conditions of sale or other
disposition; lending activities
(1) The Corporation is authorized to purchase, and make
commitments to purchase, residential mortgages. The Corporation may
hold and deal with, and sell or otherwise dispose of, pursuant to
commitments or otherwise, any such mortgage or interest therein.
The operations of the Corporation under this section shall be
confined so far as practicable to residential mortgages which are
deemed by the Corporation to be of such quality, type, and class as
to meet generally the purchase standards imposed by private
institutional mortgage investors. The Corporation may establish
requirements, and impose charges or fees, which may be regarded as
elements of pricing, for different classes of sellers or servicers,
and for such purposes the Corporation is authorized to classify
sellers or servicers according to type, size, location, assets, or,
without limitation on the generality of the foregoing, on such
other basis or bases of differentiation as the Corporation may
consider necessary or appropriate to effectuate the purposes or
provisions of this chapter. The Corporation may specify
requirements concerning among other things, (A) minimum net worth;
(B) supervisory mechanisms; (C) warranty compensation mechanisms;
(D) prior approval of facilities; (E) prior origination and
servicing experience with respect to different types of mortgages;
(F) capital contributions and substitutes; (G) mortgage purchase
volume limits; and (H) reduction of mortgage purchases during
periods of borrowing. With respect to any particular type of
seller, the Corporation shall not be required to make available
programs involving prior approval of mortgages, optional delivery
of mortgages, and purchase of other than conventional mortgages to
an extent greater than the Corporation elects to make such programs
available to other types of eligible sellers. Any requirements
specified by the Corporation pursuant to the preceding three
sentences must bear a rational relationship to the purposes or
provisions of this chapter, but will not be considered
discriminatory solely on the grounds of differential effects on
types of eligible sellers. Insofar as is practicable, the
Corporation shall make reasonable efforts to encourage
participation in its programs by each type of eligible seller.
Nothing in this section authorizes the Corporation to impose any
charge or fee upon any mortgagee approved by the Secretary of
Housing and Urban Development for participation in any mortgage
insurance program under the National Housing Act [12 U.S.C. 1701 et
seq.] solely because of such status.
(2) No conventional mortgage secured by a property comprising one-
to four-family dwelling units shall be purchased under this
section if the outstanding principal balance of the mortgage at the
time of purchase exceeds 80 per centum of the value of the property
securing the mortgage, unless (A) the seller retains a
participation of not less than 10 per centum in the mortgage; (B)
for such period and under such circumstances as the Corporation may
require, the seller agrees to repurchase or replace the mortgage
upon demand of the Corporation in the event that the mortgage is in
default; or (C) that portion of the unpaid principal balance of the
mortgage which is in excess of such 80 per centum is guaranteed or
insured by a qualified insurer as determined by the Corporation.
The Corporation shall not issue a commitment to purchase a
conventional mortgage prior to the date the mortgage is originated,
if such mortgage is eligible for purchase under the preceding
sentence only by reason of compliance with the requirements of
clause (A) of such sentence. The Corporation may purchase a
conventional mortgage which was originated more than one year prior
to the purchase date only if the seller is the Federal Deposit
Insurance Corporation, the Resolution Trust Corporation, the
National Credit Union Administration, or any other seller currently
engaged in mortgage lending or investing activities. With respect
to any transaction in which a seller contemporaneously sells
mortgages originated more than one year old prior to the date of
sale to the Corporation and receives in payment for such mortgages
securities representing undivided interests only in those
mortgages, the Corporation shall not impose any fee or charge upon
an eligible seller which is not a member of a Federal Home Loan
Bank which differs from that imposed upon an eligible seller which
is such a member. The Corporation shall establish limitations
governing the maximum original principal obligation of conventional
mortgages that are purchased by it; in any case in which the
Corporation purchases a participation interest in such a mortgage,
the limitation shall be calculated with respect to the total
original principal obligation of the mortgage and not merely with
respect to the interest purchased by the Corporation. Such
limitations shall not exceed $93,750 for a mortgage secured by a
single-family residence, $120,000 for a mortgage secured by a two-
family residence, $145,000 for a mortgage secured by a three-
family residence, and $180,000 for a mortgage secured by a four-
family residence, except that such maximum limitations shall be
adjusted effective January 1 of each year beginning with 1981. Each
such adjustment shall be made by adding to each such amount (as it
may have been previously adjusted) a percentage thereof equal to
the percentage increase during the twelve-month period ending with
the previous October in the national average one-family house price
in the monthly survey of all major lenders conducted by the Federal
Housing Finance Board. The foregoing limitations may be increased
by not to exceed 50 per centum with respect to properties located
in Alaska, Guam, Hawaii, and the Virgin Islands.
(3) The sale or other disposition by the Corporation of a
mortgage under this section may be with or without recourse, and
shall be upon such terms and conditions relating to resale,
repurchase, guaranty, substitution, replacement, or otherwise as
the Corporation may prescribe.
(4)(A) The Corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in (i) residential
mortgages that are secured by a subordinate lien against a one- to
four-family residence that is the principal residence of the
mortgagor; and (ii) residential mortgages that are secured by a
subordinate lien against a property comprising five or more family
dwelling units. If the Corporation shall have purchased, serviced,
sold, or otherwise dealt with any other outstanding mortgage
secured by the same residence, the aggregate original amount of
such other mortgage and the mortgage authorized to be purchased,
serviced, sold, or otherwise dealt with under this paragraph shall
not exceed the applicable limitation determined under paragraph
(2).
(B) The Corporation shall establish limitations governing the
maximum original principal obligation of such mortgages. In any
case in which the Corporation purchases a participation interest in
such a mortgage, the limitation shall be calculated with respect to
the total original principal obligation of such mortgage secured by
a subordinate lien and not merely with respect to the interest
purchased by the Corporation. Such limitations shall not exceed (i)
with respect to mortgages described in subparagraph (A)(i), 50 per
centum of the single-family residence mortgage limitation
determined under paragraph (2); and (ii) with respect to mortgages
described in subparagraph (A)(ii), the applicable limitation
determined under paragraph (2).
(C) No subordinate mortgage against a one- to four-family
residence shall be purchased by the Corporation if the total
outstanding indebtedness secured by the property as a result of
such mortgage exceeds 80 per centum of the value of such property
unless (i) that portion of such total outstanding indebtedness that
exceeds such 80 per centum is guaranteed or insured by a qualified
insurer as determined by the Corporation; (ii) the seller retains a
participation of not less than 10 per centum in the mortgage; or
(iii) for such period and under such circumstances as the
Corporation may require, the seller agrees to repurchase or replace
the mortgage upon demand of the Corporation in the event that the
mortgage is in default. The Corporation shall not issue a
commitment to purchase a subordinate mortgage prior to the date the
mortgage is originated, if such mortgage is eligible for purchase
under the preceding sentence only by reason of compliance with the
requirements of clause (iii) of such sentence.
(5) The Corporation is authorized to lend on the security of, and
to make commitments to lend on the security of, any mortgage that
the Corporation is authorized to purchase under this section. The
volume of the Corporation's lending activities and the
establishment of its loan ratios, interest rates, maturities, and
charges or fees in its secondary market operations under this
paragraph, shall be determined by the Corporation from time to
time; and such determinations shall be consistent with the
objectives that the lending activities shall be conducted on such
terms as will reasonably prevent excessive use of the Corporation's
facilities, and that the operations of the Corporation under this
paragraph shall be within its income derived from such operations
and that such operations shall be fully self-supporting. The
Corporation shall not be permitted to use its lending authority
under this paragraph (A) to advance funds to a mortgage seller on
an interim basis, using mortgage loans as collateral, pending the
sale of the mortgages in the secondary market; or (B) to originate
mortgage loans. Notwithstanding any Federal, State, or other law to
the contrary, the Corporation is hereby empowered, in connection
with any loan under this paragraph, whether before or after any
default, to provide by contract with the borrower for the
settlement or extinguishment, upon default, of any redemption,
equitable, legal, or other right, title, or interest of the
borrower in any mortgage or mortgages that constitute the security
for the loan; and with respect to any such loan, in the event of
default and pursuant otherwise to the terms of the contract, the
mortgages that constitute such security shall become the absolute
property of the Corporation.
(b) Authority of other institutions to enter into, perform, and
carry out transactions
Notwithstanding any other law, authority to enter into and to
perform and carry out any transactions or matter referred to in
this section is conferred on any Federal home loan bank, the
Resolution Trust Corporation, the Federal Deposit Insurance
Corporation, the National Credit Union Administration, any Federal
savings and loan association, any Federal home loan bank member,
and any other financial institution the deposits or accounts of
which are insured by an agency of the United States to the extent
that Congress has the power to confer such authority.
(c) Prior approval of Secretary for new programs
The Corporation may not implement any new program (as such term
is defined in section 4502 of this title) before obtaining the
approval of the Secretary under section 4542 of this title.