PART A—MORTGAGE
USURY LAWS
SECTION 501—Mortgages (a) (1) The provisions of the constitution
or the laws of any State expressly limiting the rate or amount of
interest, discount points, finance charges, or other charges which
may be charged, taken, received, or reserved shall not apply to any
loan, mortgage, credit sale, or advance which is—
(A) secured
by a first lien on residential real property, by a first lien on all
stock allocated to a dwelling unit in a residential cooperative housing
corporation, or by a first lien on a residential manufactured home;
(B) made after March
31, 1980; and
(C)
described in section 527(b) of the National Housing Act (12 U.S.C.
1735f -5(b)), except that for the purpose of this section—
(i) the limitation
described in section 527(b)(1) of such Act that the property must
be designed principally for the occupancy of from one to four families
shall not apply;
(ii) the requirement
contained in section 527(b)(1) of such Act that the loan be secured
by residential real property shall not apply to a loan secured by
stock in a residential cooperative housing corporation or to a loan
or credit sale secured by a first lien on a residential manufactured
home;
(iii) the term “federally
related mortgage loan” in section 527(b) of such Act shall include
a credit sale which is secured by a first lien on a residential manufactured
home and which otherwise meets the definitional requirements of section
527(b) of such Act, as those requirements are modified by this section;
(iv) the term “residential
loans” in section 527(b)(2)(D) of such Act shall also include loans
or credit sales secured by a first lien on a residential manufactured
home;
(v) the requirement
contained in section 527(b)(2)(D) of such Act that a creditor make
or invest in loans aggregating more than $1,000,000 per year shall
not apply to a creditor selling residential manufactured homes financed
by loans or credit sales secured by first liens on residential manufactured
homes if the creditor has an arrangement to sell such loans or credit
sales in whole or in part, or if such loans or credit sales are sold
in whole or in part to a lender, institution, or creditor described
in section 527(b) of such Act or in this section or a creditor, as
defined in section 103(f) of the Truth in Lending Act, as such section
was in effect on the day preceding the date of enactment of this title,
if such creditor makes or invests in residential real estate loans
or loans or credit sales secured by first liens on residential manufactured
homes aggregating more than $1,000,000 per year; and
(vi) the term “lender” in section 527(b)(2)(A)
of such Act shall also be deemed to include any lender approved by
the Secretary of Housing and Urban Development for participation in
any mortgage insurance program under the National Housing Act, and
any individual who finances the sale or exchange of residential real
property or a residential manufactured home which such individual
owns and which such individual occupies or has occupied as his principal
residence.
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(2) The provisions of the constitution
or law of any State expressly limiting the rate or amount of interest
which may be charged, taken, received, or reserved shall not apply
to any deposit or account held by, or other obligation of a depository
institution. For purposes of this paragraph, the term “depository
institution” means—
(i) any insured bank as defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(ii) any mutual savings
bank as defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813);
(iii) any savings bank as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813);
(iv) any insured credit union as defined
in section 101 of the Federal Credit Union Act (12 U.S.C. 1752);
(v) any member as
defined in section 2 of the Federal Home Loan Bank Act (12 U.S.C.
1422); and
(vi) any
insured institution as defined in section 408 of the National Housing
Act (12 U.S.C. 1730a).
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(b) (1) Except as provided in paragraphs
(2) and (3), the provisions of subsection (a)(1) shall apply to any
loan, mortgage, credit sale, or advance made in any State on or after
April 1, 1980.
(2)
Except as provided in paragraph (3), the provisions of subsection
(a)(1) shall not apply to any loan, mortgage, credit sale, or advance
made in any State after the date (on or after April 1, 1980, and before
April 1, 1983) on which such State adopts a law or certifies that
the voters of such State have voted in favor of any provision, constitutional or otherwise,
which states explicitly and by its terms that such State does not
want the provisions of subsection (a)(1) to apply with respect to
loans, mortgages, credit sales, and advances made in such State.
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(3) In any case in which a
State takes an action described in paragraph (2), the provisions of
subsection (a)(1) shall continue to apply to—
(A) any
loan, mortgage, credit sale, or advance which is made after the date
such action was taken pursuant to a commitment therefor which was
entered during the period beginning on April 1, 1980, and ending on
the date on which such State takes such action; and
(B) any loan, mortgage, or advance which
is a rollover of a loan, mortgage, or advance, as described in regulations
of the Federal Home Loan Bank Board, which was made or committed to
be made during the period beginning on April 1, 1980, and ending on
the date on which such State takes any action described in paragraph
(2).
(4)
At any time after the date of enactment of this Act, any State may
adopt a provision of law placing limitations on discount points or
such other charges on any loan, mortgage, credit sale, or advance
described in subsection (a)(1).
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(c) The provisions
of subsection (a)(1) shall not apply to a loan, mortgage, credit sale,
or advance which is secured by a first lien on a residential manufactured
home unless the terms and conditions relating to such loan, mortgage,
credit sale, or advance comply with consumer protection provisions
specified in regulations prescribed by the Federal Home Loan Bank
Board. Such regulations shall—
(1) include consumer protection provisions
with respect to balloon payments, prepayment penalties, late charges,
and deferral fees;
*(2) require a 30-day notice prior to instituting
any action leading to repossession or foreclosure (except in the case
of abandonment or other extreme circumstances);
(3) require that upon prepayment in full,
the debtor shall be entitled to a refund of the unearned portion of
the precomputed finance charge in an amount not less than the amount
which would be calculated by the actuarial method, except that the
debtor shall not be entitled to a refund which is less than $1; and
(4) include such other
provisions as the Federal Home Loan Bank Board may prescribe after
a finding that additional protections are required.
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(d) The provisions of subsection (c) shall not apply to a loan, mortgage,
credit sale, or advance secured by a first lien on a residential manufactured
home until regulations required to be issued pursuant to paragraphs
(1), (2), and (3) of subsection (c) take effect, except that the provisions
of subsection (c) shall apply in the case of such a loan, mortgage,
credit sale, or advance made prior to the date on which such regulations
take effect if the loan, mortgage, credit sale, or advance includes
a precomputed finance charge and does not provide that, upon prepayment
in full, the refund of the unearned portion of the precomputed finance
charge is in an amount not less the amount which would be calculated
by the actuarial method, except that the debtor shall not be entitled
to a refund which is less than $1. The Federal Home Loan Bank Board
shall issue regulations pursuant to the provisions of paragraphs (1),
(2), and (3) of subsection (c) that shall take effect prospectively
not less than 30 days after publication in the Federal Register and not later than 120
days from the date of enactment of this Act.
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(e) For the purpose
of this section—
(1) a “prepayment” occurs upon—
(A) the
refinancing or consolidation of the indebtedness;
(B) the actual prepayment of the indebtedness
by the consumer whether voluntarily or following acceleration of the
payment obligation by the creditor; or
(C) the entry of a judgment for the
indebtedness in favor of the creditor;
(2) the term “actuarial method” means the
method of allocating payments made on a debt between the outstanding
balance of the obligation and the precomputed finance charge pursuant
to which a payment is applied first to the accrued precomputed finance
charge and any remainder is subtracted from, or any deficiency is
added to, the outstanding balance of the obligation;
(3) the term “precomputed finance charge”
means interest or a time price differential within the meaning of
sections 106(a)(1) and (2) of the Truth in Lending Act (15 U.S.C.
1605(a)(1) and (2)) as computed by an add-on or discount method; and
(4) the term “residential
manufactured home” means a manufactured home as defined in section
603(6) of the National Mobile Home Construction and Safety Standards
Act of 1974 [now the National Manufactured Housing Construction and
Safety Standards Act of 1974 (42 USC 5402(6))] which is used as a
residence.
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(f) The Federal
Home Loan Bank Board is authorized to issue rules and regulations
and to publish interpretations governing the implementation of this
section.
(g) This section takes effect on April
1, 1980.
[12 USC 1735f-7a. As amended by acts of Oct. 8, 1980 (94 Stat. 1641,
1647, 1648) and Aug. 13, 1981 (95 Stat. 432).]
