Current as of: February 2010
Notwithstanding any other provisions of this chapter, in
connection with any mortgage insured pursuant to any section of
this chapter which covers a property upon which there is located a
dwelling designed principally for residential use for not more than
four families in the aggregate, the Secretary is authorized, upon
such terms and conditions as he may prescribe, to insure under said
section the amount of any advance for the improvement or repair of
such property made to the mortgagor pursuant to an "open-end"
provision in the mortgage, and to add the amount of such advance to
the original principal obligation in determining the value of the
mortgage for the purpose of computing the amounts of debentures and
certificate of claim to which the mortgagee may be entitled:
Provided, That the Secretary may require the payment of such
charges, including in lieu of insurance premiums, as he may
consider appropriate for the insurance of such "open-end" advances:
Provided, further, That only advances for such improvements or
repairs as substantially protect or improve the basic livability or
utility of the property involved shall be eligible for insurance
under this section; Provided further, That no such advance shall be
insured under this section if the amount thereof plus the amount of
the unpaid balance of the original principal obligation of the
mortgage would exceed the amount of such original principal
obligation unless the mortgagor certifies that the proceeds of such
advance will be used to finance the construction of additional
rooms or other enclosed space as a part of the dwelling: And
provided further, That the insurance of "open-end" advances shall
not be taken into account in determining the aggregate amount of
principal obligations of mortgages which may be insured under this
chapter.
Legislative History ________________________________________________________________________
U.S. Code Provisions: Credit InsuranceState Laws: Credit Insurance
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