12 USC 1715 - Loan guarantees for Native Hawaiian housing

View all text of Subchapter II [§ 1707 - § 1715z-25]

§ 1715z–13b. Loan guarantees for Native Hawaiian housing

(a) DefinitionsIn this section:

(1) Department of Hawaiian Home Lands

(2) Eligible entity

(3) Family

(4) Guarantee Fund

(5) Hawaiian Home LandsThe term “Hawaiian Home Lands” means lands that—

(A) have the status of Hawaiian Home Lands under section 204 of the Hawaiian Homes Commission Act (42 Stat. 110); or

(B) are acquired pursuant to that Act.

(6) Native HawaiianThe term “Native Hawaiian” means any individual who is—

(A) a citizen of the United States; and

(B) a descendant of the aboriginal people, who, prior to 1778, occupied and exercised sovereignty in the area that currently constitutes the State of Hawaii, as evidenced by—

(i) genealogical records;

(ii) verification by kupuna (elders) or kama’aina (long-term community residents); or

(iii) birth records of the State of Hawaii.

(7) Office of Hawaiian Affairs

(b) Authority

(1) Eligible borrowersThe loan is made only to a borrower who is—

(A) a Native Hawaiian family;

(B) the Department of Hawaiian Home Lands;

(D) a private nonprofit organization experienced in the planning and development of affordable housing for Native Hawaiians.

(2) Eligible housing

(A) In general

(B) Housing planA housing plan described in this subparagraph is a housing plan that—

(i) has been submitted and approved by the Secretary under section 4223 of title 25; and

(ii) provides for the use of loan guarantees under this section to provide affordable homeownership housing on Hawaiian Home Lands.

(3) Security

(4) Lenders

(A) In general

(B) ApprovalThe following lenders shall be considered to be lenders that have been approved by the Secretary:

(i) Any mortgagee approved by the Secretary for participation in the single family mortgage insurance program under title II of the National Housing Act [12 U.S.C. 1707 et seq.].

(ii) Any lender that makes housing loans under chapter 37 of title 38 that are automatically guaranteed under section 3702(d) of title 38.

(iii) Any lender approved by the Secretary of Agriculture to make guaranteed loans for single family housing under the Housing Act of 1949 [42 U.S.C. 1441 et seq.].

(iv) Any other lender that is supervised, approved, regulated, or insured by any agency of the Federal Government.

(5) TermsThe loan shall—

(A) be made for a term not exceeding 30 years;

(B) bear interest (exclusive of the guarantee fee under subsection (e) and service charges, if any) at a rate agreed upon by the borrower and the lender and determined by the Secretary to be reasonable, but not to exceed the rate generally charged in the area (as determined by the Secretary) for home mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal Government;

(i) 97.75 percent of the appraised value of the property as of the date the loan is accepted for guarantee (or 98.75 percent if the value of the property is $50,000 or less); or

(ii) the amount approved by the Secretary under this section; and

(D) involve a payment on account of the property—

(i) in cash or its equivalent; or

(ii) through the value of any improvements to the property made through the skilled or unskilled labor of the borrower, as the Secretary shall provide.

(d) Certificate of guarantee

(1) Approval process

(A) In general

(B) Approval

(2) Standard for approval

(3) Effect

(A) In general

(B) Evidence

(4) Fraud and misrepresentationThis subsection may not be construed—

(A) to preclude the Secretary from establishing defenses against the original lender based on fraud or material misrepresentation; or

(B) to bar the Secretary from establishing by regulations that are on the date of issuance or disbursement, whichever is earlier, partial defenses to the amount payable on the guarantee.

(e) Guarantee fee

(1) In general

(2) PaymentThe fee under this subsection shall—

(A) be paid by the lender at time of issuance of the guarantee; and

(B) be adequate, in the determination of the Secretary, to cover expenses and probable losses.

(3) Deposit

(f) Liability under guarantee

(g) Transfer and assumption

(h) Disqualification of lenders and civil money penalties

(1) In general

(A) Grounds for actionThe Secretary may take action under subparagraph (B) if the Secretary determines that any lender or holder of a guarantee certificate under subsection (d)—

(i) has failed—(I) to maintain adequate accounting records;(II) to service adequately loans guaranteed under this section; or(III) to exercise proper credit or underwriting judgment; or

(ii) has engaged in practices otherwise detrimental to the interest of a borrower or the United States.

(B) ActionsUpon a determination by the Secretary that a holder of a guarantee certificate under subsection (d) has failed to carry out an activity described in subparagraph (A)(i) or has engaged in practices described in subparagraph (A)(ii), the Secretary may—

(i) refuse, either temporarily or permanently, to guarantee any further loans made by such lender or holder;

(ii) bar such lender or holder from acquiring additional loans guaranteed under this section; and

(iii) require that such lender or holder assume not less than 10 percent of any loss on further loans made or held by the lender or holder that are guaranteed under this section.

(2) Civil money penalties for intentional violations

(A) In generalThe Secretary may impose a civil monetary penalty on a lender or holder of a guarantee certificate under subsection (d) if the Secretary determines that the holder or lender has intentionally failed—

(i) to maintain adequate accounting records;

(ii) to adequately service loans guaranteed under this section; or

(iii) to exercise proper credit or underwriting judgment.

(B) Penalties

(3) Payment on loans made in good faith

(i) Payment under guarantee

(1) Lender options

(A) In general

(i) Notification

(ii) PaymentUpon providing the notice required under clause (i), the holder of the guarantee certificate shall be entitled to payment under the guarantee (subject to the provisions of this section) and may proceed to obtain payment in one of the following manners:(I) Foreclosure(aa) In general(bb) Payment(cc) Subrogation(II) No foreclosure(aa) In general(bb) Payment(cc) Subrogation

(B) Requirements

(2) Limitations on liquidation

(A) In general

(B) Limitation

(j) Hawaiian Housing Loan Guarantee Fund

(1) Establishment

(2) CreditsThe Guarantee Fund shall be credited with—

(A) any amount, claims, notes, mortgages, contracts, and property acquired by the Secretary under this section, and any collections and proceeds therefrom;

(B) any amounts appropriated pursuant to paragraph (7);

(D) any interest or earnings on amounts invested under paragraph (4).

(3) UseAmounts in the Guarantee Fund shall be available, to the extent provided in appropriations Acts, for—

(A) fulfilling any obligations of the Secretary with respect to loans guaranteed under this section, including the costs (as that term is defined in section 661a of title 2) of such loans;

(B) paying taxes, insurance, prior liens, expenses necessary to make fiscal adjustment in connection with the application and transmittal of collections, and other expenses and advances to protect the Secretary for loans which are guaranteed under this section or held by the Secretary;

(D) paying administrative expenses in connection with this section; and

(E) reasonable and necessary costs of rehabilitation and repair to properties that the Secretary holds or owns pursuant to this section.

(4) Investment

(5) Limitation on commitments to guarantee loans and mortgages

(A) Requirement of appropriations

(B) Limitations on costs of guarantees

(6) Liabilities

(7) Authorization of appropriations

(k) Requirements for standard housing

(1) In general

(2) StandardsThe standards referred to in paragraph (1) shall—

(A) provide sufficient flexibility to permit the use of various designs and materials in housing acquired with loans guaranteed under this section; and

(B) require each dwelling unit in any housing acquired in the manner described in subparagraph (A) to—

(i) be decent, safe, sanitary, and modest in size and design;

(ii) conform with applicable general construction standards for the region in which the housing is located;

(iii) contain a plumbing system that—(I) uses a properly installed system of piping;(II) includes a kitchen sink and a partitional bathroom with lavatory, toilet, and bath or shower; and(III) uses water supply, plumbing, and sewage disposal systems that conform to any minimum standards established by the applicable county or State;

(iv) contain an electrical system using wiring and equipment properly installed to safely supply electrical energy for adequate lighting and for operation of appliances that conforms to any appropriate county, State, or national code;

(v) be not less than the size provided under the applicable locally adopted standards for size of dwelling units, except that the Secretary, upon request of the Department of Hawaiian Home Lands may waive the size requirements under this paragraph; and

(vi) conform with the energy performance requirements for new construction established by the Secretary under section 526(a) of the National Housing Act [12 U.S.C. 1735f–4(a)], unless the Secretary determines that the requirements are not applicable.

(l) Applicability of civil rights statutes

(Pub. L. 102–550, title I, § 184A, as added Pub. L. 106–568, title II, § 204, Dec. 27, 2000, 114 Stat. 2895, and Pub. L. 106–569, title V, § 514, Dec. 27, 2000, 114 Stat. 2989.)