1

2

3

4

5

6

7

76

(5) mortgage insurance premium;

(6) the protection, operation, or preservation of the property (and the Secretary has approved such

payments); and

(7) any taxes imposed upon any deed or any instrument by which the property was acquired by the mortgagee and transferred or conveyed to the Secretary. 8 In addition to the foregoing, there may be added an amount 9 not to exceed the foreclosure, acquisition, and conveyance 10 costs approved by the Secretary, including payments made 11 by the mortgagee for the cost of acquiring the property and 12 conveying and evidencing title to the property to the 13 Secretary.

14 (d) There shall be deducted from such unpaid principal 15 any amounts received by the mortgagee, after the institution 16 of foreclosure (or after the acquisition of the property by 17 means other than foreclosure) which—

22

(1) were paid on account of the mortgage; or

(2) were collected as rental or other income from

the property, less reasonable expenses incurred in han

dling the property.

(e) With respect to mortgages to which the provisions 23 of sections 302 and 306 of the Soldiers' and Sailors' Civil 24 Relief Act of 1940 apply, there shall be included in the 25 insurance settlement an amount which the Secretary finds

77

1 to be sufficient to compensate the mortgagee for any loss 2 which it may have sustained on account of interest on 3 debentures by reason of its having postponed the institution 4 of foreclosure proceedings or the acquisition of the property 5 by other means during any part or all of the period of mili6 tary service and three months thereafter.

7 (f) Insurance claims shall be paid by the Secretary, in 8 his discretion, with cash or debentures or by a combination 9 of cash and debentures.

10

(g) Where the claim is paid in cash, it shall be in an 11 amount equivalent to the face value of the debentures that 12 would otherwise be issued plus an amount equivalent to the 13 interest which the debentures would have earned, computed 14 to the date to be established pursuant to regulations issued 15 by the Secretary.

16

17

FORBEARANCE OF PAYMENTS

SEC. 602. With respect to a home mortgage, if the Sec18 retary finds, after notice of default, that the default was due to circumstances beyond the control of the mortgagor, he

19

may

(1) approve the request of the mortgagee for an extension of the time for the curing of the default and of the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property to such time as the Secretary may determine is necessary

78

and desirable to enable the mortgagor to complete the

mortgage payments. Such extension of time may be

beyond the stated maturity of the mortgage. Where there has been an extension of time and there is a sub

sequent foreclosure (or acquisition of the property by other means), the Secretary is authorized to include in the insurance settlement an amount equal to any unpaid mortgage interest; or

(2) approve a modification of the terms of the mortgage for the purpose of changing the amortization provisions by recasting, over the remaining term of the

mortgage or over such longer period as may be approved by the Secretary, the total unpaid amount then due, as

determined by the Secretary. Such modification may become effective currently or become effective upon the termination of an agreed-upon extension of the period for curing the default. The principal amount of the mortgage, as modified, shall be considered to be the "original

principal obligation of the mortgage" as that term is

used in section 601 for the purpose of computing the total

face value of the debentures to be issued or the cash pay

ment to be made by the Secretary to a mortgagee.

ACQUISITION OF HOME MORTGAGES TO AVOID

FORECLOSURE

SEC. 603. (a) Upon receiving notice of the default of

a home mortgage, the Secretary (in his discretion and for the

79

1 purpose of avoiding foreclosure of the mortgage) may con2 sent to the assignment of the defaulted mortgage. Where 3 such an assignment occurs, the mortgagee shall be entitled 4 to receive (in lieu of the insurance benefits prescribed in 5 section 601) an insurance payment in an amount equal 6 to the unpaid principal balance of the mortgage plus

7

8

9

10

11

12

13

14

(1) any unpaid mortgage interest;

(2) reimbursement for such costs and attorney's fees as the Secretary finds were properly incurred in connection with the defaulted mortgage and its assignment to the Secretary; and

(3) any proper advances of funds made by the mortgagee under the provisions of the mortgage.

(b) After acquisition of the mortgage by the Secretary, 15 the mortgagee shall have no further rights, liabilities, or 16 obligations with respect to the mortgage.

17

PROJECT MORTGAGE INSURANCE CLAIM SETTLEMENT

18

19

20

SEC. 604. (a) The failure of the mortgagor to make any payment due under or provided to be paid by the terms of a

project mortgage or loan insured under any section of title 21 V shall be considered a default under such mortgage and, 22 if such default continues for a period of thirty days, the mort

23

24

25

gagee

shall be entitled to receive the benefits of the insurance

as hereinafter provided upon assignment, transfer, and deliv

ery to the Secretary within a period and in accordance with

26 rules and regulations to be prescribed by the Secretary of

1

2

3

4

5

80

(1) all rights and interests arising under the mort

gage so in default;

(2) all claims of the mortgagee against the mort

gagor or others, arising out of the mortgage transaction;

(3) all policies of title or other insurance or surety

6 bonds or other guaranties and any and all claims there

7

8

9

10

11

12

23

13

14

15

16

17

(4) any balance of the mortgage loan not advanced

to or for the account of the mortgagor;

(5) any cash or property held by the mortgagee, or to which it is entitled, as deposits made for the account of the mortgagor and which have not been applied in

reduction of the principal of the mortgage indebtedness; and

(6) all records, documents, books, papers, and accounts relating to the mortgage transaction.

(b) Insurance claims shall be settled by the Secretary 18 (1) by a payment to the mortgagee which, at the option of 19 the Secretary, shall be in cash or debentures or a combination 20 of cash and debentures having a total face value equal to the 21 value of the mortgage and (2) by the issuance to the mort22 gagee of a certificate of claim as provided in subsection (e). 23 Where the claim is paid in cash, it shall be in an amount 24 equivalent to the face value of the debentures that would 25 otherwise be issued plus an amount equivalent to the in