12 U.S.C. § 1717 : US Code - Section 1717: Federal National Mortgage Association and Government National Mortgage Association

Search 12 U.S.C. § 1717 : US Code - Section 1717: Federal National Mortgage Association and Government National Mortgage Association

(a) Creation; succession; principal and other offices
(1) There is created a body corporate to be known as the "Federal
National Mortgage Association", which shall be in the Department of
Housing and Urban Development. The Association shall have
succession until dissolved by Act of Congress. It shall maintain
its principal office in the District of Columbia and shall be
deemed, for purposes of venue in civil actions, to be a resident
thereof. Agencies or offices may be established by the Association
in such other place or places as it may deem necessary or
appropriate in the conduct of its business.
(2) On September 1, 1968, the body corporate described in the
foregoing paragraph shall cease to exist in that form and is hereby
partitioned into two separate and distinct bodies corporate, each
of which shall have continuity and corporate succession as a
separated portion of the previously existing body corporate, as
follows:
(A) One of such separated portions shall be a body corporate
without capital stock to be known as Government National Mortgage
Association (hereinafter referred to as the "Association"), which
shall be in the Department of Housing and Urban Development and
which shall retain the assets and liabilities acquired and
incurred under sections 1720 (!1) and 1721 of this title prior to
such date, including any and all liabilities incurred pursuant to
subsection (c) of this section. The Association shall have
succession until dissolved by Act of Congress. It shall maintain
its principal office in the District of Columbia and shall be
deemed, for purposes of venue in civil actions, to be a resident
thereof. Agencies or offices may be established by the
Association in such other place or places as it may deem
necessary or appropriate in the conduct of its business.
(B) The other such separated portion shall be a body corporate
to be known as Federal National Mortgage Association (hereinafter
referred to as the "corporation"), which shall retain the assets
and liabilities acquired and incurred under sections 1718 and
1719 of this title prior to such date. The corporation shall have
succession until dissolved by Act of Congress. It shall maintain
its principal office in the District of Columbia or the
metropolitan area thereof and shall be deemed, for purposes of
jurisdiction and venue in civil actions, to be a District of
Columbia corporation.
(3) The partition transaction effected pursuant to the foregoing
paragraph constitutes a reorganization within the meaning of
section 368(a)(1)(E) of title 26; and for the purposes of such
title 26, no gain or loss is recognized by the previously existing
body corporate by reason of the partition, and the basis and
holding period of the assets of the corporation immediately
following such partition are the same as the basis and holding
period of such assets immediately prior to such partition.
(b) Purchase and sale of insured and conventional mortgages;
transactions in loans and advances of credit
(1) For the purposes set forth in section 1716 of this title and
subject to the limitations and restrictions of this subchapter,
each of the bodies corporate named in subsection (a)(2) of this
section is authorized pursuant to commitments or otherwise, to
purchase, service, sell, or otherwise deal in any mortgages which
are insured under this chapter or title V of the Housing Act of
1949 [42 U.S.C. 1471 et seq.], or which are insured or guaranteed
under the Servicemen's Readjustment Act of 1944 or chapter 37 of
title 38; and to purchase, service, sell, or otherwise deal in any
loans made or guaranteed under part B of title VI of the Public
Health Service Act [42 U.S.C. 291j-1 et seq.]; and the corporation
is authorized to lend on the security of any such mortgages and to
purchase, sell, or otherwise deal in any securities guaranteed by
the Association under section 1721(g) of this title: Provided, That
(1) the Association may not purchase any mortgage at a price
exceeding 100 per centum of the unpaid principal amount thereof at
the time of purchase, with adjustments for interest and any
comparable items; (2) the Association may not purchase any
mortgage, except a mortgage insured under title V of the Housing
Act of 1949 [42 U.S.C. 1471 et seq.], if it is offered by, or
covers property held by, a State, territorial, or municipal
instrumentality; and (3) the Association may not purchase any
mortgage under section 1720 (!2) of this title, except a mortgage
insured under section 1715k of this title or subchapter VIII of
this chapter or section 1709(k) of this title, or under subchapter
IX-A (!2) of this chapter with respect to a new community approved
under section 1749cc-1 (!2) of this title, or insured under section
1715e of this title and covering property located in an urban
renewal area, or a mortgage covering property located in Alaska,
Guam, or Hawaii, if the original principal obligation thereof
exceeds or exceeded $55,000 in the case of property upon which is
located a dwelling designed principally for a one-family residence;
or $60,000 in the case of a two- or three-family residence; or
$68,750 in the case of a four-family residence; or, in the case of
a property containing more than four dwelling units, $38,000 per
dwelling unit (or such higher amount not in excess of $45,000 per
dwelling unit as the Secretary may by regulation specify in any
geographical area where the Secretary finds that cost levels so
require) for that part of the property attributable to dwelling
use. Notwithstanding the provisions of clause (3) of the preceding
sentence, the Association may purchase a mortgage under section
1720 (!2) of this title with an original principal obligation which
exceeds the otherwise applicable maximum amount per dwelling unit
if the mortgage is insured under section 1713(c)(3), 1715e(b)(2),
1715k(d)(3)(B)(iii), 1715l(d)(3)(ii), 1715l(d)(4)(ii), 1715v(c)(2),
1715y(e)(3), or 1715z-1 of this title. For the purposes of this
subchapter, the terms "mortgages" and "home mortgages" shall be
inclusive of any mortgages or other loans insured under any of the
provisions of this chapter or title V of the Housing Act of 1949
[42 U.S.C. 1471 et seq.].
(2) For the purposes set forth in section 1716(a) of this title,
the corporation is authorized, pursuant to commitments or
otherwise, to purchase, service, sell, lend on the security of, or
otherwise deal in mortgages which are not insured or guaranteed as
provided in paragraph (1) (such mortgages referred to hereinafter
as "conventional mortgages"). No such purchase of a conventional
mortgage secured by a property comprising one- to four-family
dwelling units shall be made 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. For the purpose of this section,
the term "conventional mortgages" shall include a mortgage, lien,
or other security interest on the stock or membership certificate
issued to a tenant-stockholder or resident-member of a cooperative
housing corporation, as defined in section 216 of title 26, and on
the proprietary lease, occupancy agreement, or right of tenancy in
the dwelling unit of the tenant-stockholder or resident-member in
such cooperative housing corporation. 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 corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in loans or advances of
credit for the purchase and installation of home improvements,
including energy conserving improvements or solar energy systems
described in the last paragraph of section 1703(a) of this title
and residential energy conservation measures as described in
section 210(11) of the National Energy Conservation Policy Act [42
U.S.C. 8211(11)] (!3) and financed by a public utility in
accordance with the requirements of title II of such Act [42 U.S.C.
8211 et seq.]. To be eligible for purchase, any such loan or
advance of credit (other than a loan or advance made with respect
to energy conserving improvements or solar energy systems or
residential energy conservation measures) not insured under
subchapter I of this chapter shall be secured by a lien against the
property to be improved.
(4) The corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in loans or advances of
credit secured by mortgages or other liens against manufactured
homes.
(5)(A) The corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in (i) conventional
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) conventional mortgages that are secured by a
subordinate lien against a property comprising five or more family
dwelling units. If the corporation, pursuant to paragraphs (1)
through (4), 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 conventional mortgages
described in subparagraph (A). 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 described in subparagraph (A)
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 (ii) of such sentence.
(6) 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.
(c) Administration of trusts; obligations of departments and
agencies of the United States; exemption of interest income from
taxation; authorization of appropriations for differential
reimbursements
(1) Notwithstanding any other provision of this chapter or of any
other law, the Association is authorized under section 1721 of this
title to create, accept, execute, and otherwise administer in all
respects such trusts, receiverships, conservatorships, liquidating
or other agencies, or other fiduciary and representative
undertakings and activities, hereinafter in this subsection called
"trusts", as might be appropriate for financing purposes; and in
relation thereto the Association may acquire, hold and manage,
dispose of, and otherwise deal in any mortgages or other types of
obligations in which any department or agency of the United States
listed in paragraph (2) of this subsection may have a financial
interest. The Association may join in any such undertakings and
activities, hereinafter in this subsection called "trusts";
notwithstanding that it is also serving in a fiduciary or
representative capacity; and is authorized to guarantee any
participations or other instruments, whether evidence of property
rights or debt, issued for such financing purposes. Participations
or other instruments issued by the Association pursuant to this
subsection shall to the same extent as securities which are direct
obligations of or obligations guaranteed as to principal or
interest by the United States be deemed to be exempt securities
within the meaning of laws administered by the Securities and
Exchange Commission. The amounts of any mortgages and their
obligations acquired by the Association under section 1721 of this
title, pursuant to this subsection, shall not be included in the
total amounts set forth in section 1721(c) of this title.
(2) Subject to the limitations provided in paragraph (4) of this
subsection, one or more trusts may be established as provided in
this subsection by each of the following departments or agencies:
(A) The Farmers Home Administration of the Department of
Agriculture, but only with respect to operating loans, direct
farm ownership loans, direct housing loans, and direct soil and
water loans. Such trusts may not be established with respect to
loans for housing for the elderly under sections 502 and 515(a)
of the Housing Act of 1949 [42 U.S.C. 1472 and 1485(a)], nor with
respect to loans for nonfarm recreational development.
(B) The Department of Education, but only with respect to loans
made by the Secretary of Education for construction of academic
facilities, and loans to help finance student loan programs.
(C) The Department of Housing and Urban Development.
(D) The Department of Veterans Affairs.
(E) The Export-Import Bank.
(F) The Small Business Administration.
The head of each such department or agency, hereinafter in this
subsection called the "trustor," is authorized to set aside a part
or all of any obligations held by the trustor and subject them to a
trust or trusts and, incident thereto, shall guarantee to the
trustee timely payment thereof. The trust instrument may provide
for the issuance and sale of beneficial interests or
participations, by the trustee, in such obligations or in the right
to receive interest and principal collections therefrom; and may
provide for the substitution or withdrawal of such obligations, or
for the substitution of cash for obligations. The trust or trusts
shall be exempt from all taxation. The trust instrument may also
contain other appropriate provisions in keeping with the purposes
of this subsection. The Association shall be named and shall act as
trustee of any such trusts and, for the purposes thereof, the title
to such obligations shall be deemed to have passed to the
Association in trust. The trust instrument shall provide that
custody, control, and administration of the obligations shall
remain in the trustor subjecting the obligations to the trust,
subject to transfer to the trustee in event of default or probable
default, as determined by the trustee, in the payment of principal
and interest of the beneficial interests or participations.
Collections from obligations subject to the trust shall be dealt
with as provided in the instrument creating the trust. The trust
instrument shall provide that the trustee will promptly pay to the
trustor the full net proceeds of any sale of beneficial interests
or participations to the extent they are based upon such
obligations or collections. Such proceeds shall be dealt with as
otherwise provided by law for sales or repayment of such
obligations. The effect of both past and future sales of any issue
of beneficial interests or participations shall be the same, to the
extent of the principal of such issue, as the direct sale with
recourse of the obligations subject to the trust. Any trustor
creating a trust or trusts hereunder is authorized to purchase,
through the facilities of the trustee, outstanding beneficial
interests or participations to the extent of the amount of the
trustor's responsibility to the trustee on beneficial interests or
participations outstanding, and to pay the trustor's proper share
of the costs and expenses incurred by the Association as trustee
pursuant to the trust instrument.
(3) When any trustor guarantees to the trustee the timely payment
of obligations the trustor subjects to a trust pursuant to this
subsection, and it becomes necessary for such trustor to meet his
responsibilities under such guaranty, the trustor is authorized to
fulfill such guaranty.
(4) Beneficial interests or participations shall not be issued
for the account of any trustor in an aggregate principal amount
greater than is authorized with respect to such trustor in an
appropriation Act. Any such authorization shall remain available
only for the fiscal year for which it is granted and for the
succeeding fiscal year.
(5) The Association, as trustee, is authorized to issue and sell
beneficial interests or participations under this subsection,
notwithstanding that there may be an insufficiency in aggregate
receipts from obligations subject to the related trust to provide
for the payment by the trustee (on a timely basis out of current
receipts or otherwise) of all interest or principal on such
interests or participations (after provision for all costs and
expenses incurred by the trustee, fairly prorated among trustors).
There are authorized to be appropriated without fiscal year
limitation such sums as may be necessary to enable any trustor to
pay the trustee such insufficiency as the trustee may require on
account of outstanding beneficial interests or participations
authorized to be issued pursuant to paragraph (4) of this
subsection. Such trustor shall make timely payments to the trustee
from such appropriations, subject to and in accord with the trust
instrument. In the event that the insufficiency required by the
trustee is on account of principal maturities of outstanding
beneficial interests or participations authorized to be issued
pursuant to paragraph (4) of this subsection, or pursuant hereto,
the trustee is authorized to elect to issue additional beneficial
interests or participations for refinancing purposes in lieu of
requiring any trustor or trustors to make payments to the trustee
from appropriated funds or other sources. Each such issue of
beneficial interests or participations shall be in an amount
determined by the trustee but not in excess of the aggregate amount
which the trustee would otherwise require the trustor or trustors
to pay from appropriated funds or other sources, and may be issued
without regard to the provisions of paragraph (4) of this
subsection. All refinancing issues of beneficial interests or
participations shall be deemed to have been issued pursuant to the
authority contained in the appropriation Act or Acts under which
the beneficial interests or participations were originally issued.