§ 1715z–16. Adjustable rate single family mortgages

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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. The Secretary shall require that the mortgagee make available to the mortgagor, at the time of loan application, a written explanation of the features of an adjustable rate mortgage consistent with the disclosure requirements applicable to variable rate mortgages secured by a principal dwelling under the Truth in Lending Act [ 15 U.S.C. 1601 et seq.]. 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. The Secretary may insure under this subsection a mortgage that meets the requirements of subsection (a), except that the effective rate of interest— shall be fixed for a period of not less than the first 3 years of the mortgage term; shall be adjusted by the mortgagee initially upon the expiration of such period and annually thereafter; and in the case of the initial interest rate adjustment, is subject to the 1 percent limitation only if the interest rate remained fixed for 3 or fewer years. The disclosure required under subsection

(b)shall be required for a mortgage insured under this subsection. ( June 27, 1934, ch. 847 , title II, § 251, as added Pub. L. 98–181, title I [title IV, § 443], Nov. 30, 1983 , 97 Stat. 1225 ; amended Pub. L. 100–242, title IV, § 415(a) , Feb. 5, 1988 , 101 Stat. 1907 ; Pub. L. 107–73, title II, § 206 , Nov. 26, 2001 , 115 Stat. 674 ; Pub. L. 108–186, title III, § 301(a) , Dec. 16, 2003 , 117 Stat. 2692 .)

Connections23 cite this · traces to 1

Cited by 23 sections · top 16

statutes-at-large

Public Law 98–181
Making supplemental appropriations for the fiscal year ending September 30, 1984, and for other purposes

Traces to 1 document

U.S. Code

Congressional findings and declaration of purpose
§ 1601

10 references not yet in our index

Pub. L. 98-181
97 Stat. 1225
Pub. L. 100-242
101 Stat. 1907
Pub. L. 107-73
115 Stat. 674
Pub. L. 108-186
117 Stat. 2692
Pub. L. 90-321
82 Stat. 146

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cites case law

§ 1715z–16

Adjustable rate single family mortgages

Fed. Reg.×22

Stat.×1

U.S.C.§ 1601

Pub. L.Pub. L. 98-181

Stat.97 Stat. 1225

Pub. L.Pub. L. 100-242

Stat.101 Stat. 1907

Pub. L.Pub. L. 107-73

Cites 11 · showing 6Cited by 23 across 2 sources