
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-73 Section 206]
[CITE: 12USC1715z-16]

 
                       TITLE 12--BANKS AND BANKING
 
                      CHAPTER 13--NATIONAL HOUSING
 
                    SUBCHAPTER II--MORTGAGE INSURANCE
 
Sec. 1715z-16. Adjustable rate single family mortgages


(a) One- to four-family dwellings; maximum term of mortgage; adjustments 
        in effective rate of interest

    The Secretary may insure under any provision of this subchapter a 
mortgage involving property upon which there is located a dwelling 
designed principally for occupancy by one to four families, where the 
mortgage provides for periodic adjustments by the mortgagee in the 
effective rate of interest charged. Such interest rate adjustments may 
be accomplished through adjustments in the monthly payment amount, the 
outstanding principal balance, or the mortgage term, or a combination of 
these factors, except that in no case may any extension of a mortgage 
term result in a total term in excess of 40 years. Adjustments in the 
effective rate of interest shall correspond to a specified national 
interest rate index approved in regulations by the Secretary, 
information on which is readily accessible to mortgagors from generally 
available published sources. Adjustments in the effective rate of 
interest shall (1) be made on an annual basis; (2) be limited, with 
respect to any single interest rate increase, to no more than 1 percent 
on the outstanding loan balance; and (3) be limited to a maximum 
increase of 5 percentage points above the initial contract interest rate 
over the term of the mortgage.

(b) Written explanation of mortgage features

    The Secretary shall issue regulations requiring that the mortgagee 
make available to the mortgagor, at the time of loan application, a 
written explanation of the features of the adjustable rate mortgage, 
including a hypothetical payment schedule that displays the maximum 
potential increases in monthly payments to the mortgagor over the first 
5 years of the mortgage term.

(c) Number of mortgages and loans

    The aggregate number of mortgages and loans insured under this 
section in any fiscal year may not exceed 30 percent of the aggregate 
number of mortgages and loans insured by the Secretary under this 
subchapter during the preceding fiscal year.

(June 27, 1934, ch. 847, title II, Sec. 251, as added Pub. L. 98-181, 
title IV, Sec. 443, Nov. 30, 1983, 97 Stat. 1225; amended Pub. L. 100-
242, title IV, Sec. 415(a), Feb. 5, 1988, 101 Stat. 1907.)


                               Amendments

    1988--Subsec. (c). Pub. L. 100-242 amended subsec. (c) generally. 
Prior to amendment, subsec. (c) read as follows: ``The aggregate number 
of mortgages and loans insured under this section, section 1715z-10(c) 
of this title, and section 1715z-17 of this title in any fiscal year may 
not exceed 10 percent of the aggregate number of mortgages and loans 
insured by the Secretary under this subchapter during the preceding 
fiscal year.''

                  Section Referred to in Other Sections

    This section is referred to in section 1709 of this title; title 38 
section 3707.
