12 U.S.C. § 1735b

Expenditures to correct or reimburse for structural or other major defects in mortgaged homes

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(a) Prior to beginning of construction(1) The Secretary is authorized to make expenditures under this subsection with respect to any property that—(A) is a condominium unit (including common areas) or is improved by a one-to-four family dwelling;(B) was approved, before the beginning of construction, for mortgage insurance under this chapter or for guaranty, insurance, or direct loan under chapter 37 of title 38 or was less than a year old at the time of insurance of the mortgage and was covered by a consumer protection or warranty plan acceptable to the Secretary; and(C) the Secretary finds to have structural defects.(2) Expenditures under this subsection may be made for (A) correcting such defects, (B) paying the claims of the owner of the property arising from such defects, or (C) acquiring title to the property: Provided, That such authority of the Secretary shall exist only (A) if the owner has requested assistance from the Secretary not later than four years (or such shorter time as the Secretary may prescribe) after insurance of the mortgage, and (B) if the property is encumbered by a mortgage which is insured under this chapter after September 2, 1964.(b) Mortgages insured on or after August 1, 1968, but prior to January 1, 1973; requirements; reimbursement from seller; insurance fund chargeable

The Secretary is authorized to make expenditures to correct, or to reimburse the owner for the correction of, structural or other major defects which so seriously affect use and livability as to create a serious danger to the life or safety of inhabitants of any one, two, three, or four family dwelling which is covered by a mortgage insured under section 1715z of this title or which is located in an older, declining urban area and is covered by a mortgage insured under section 1709 or 1715l of this title on or after August 1, 1968, but prior to January 1, 1973, and which is more than one year old on the date of the issuance of the insurance commitment, if (1) the owner requests assistance from the Secretary not later than one year after the insurance of the mortgage, or, in the case of a dwelling covered by a mortgage insured under section 1709 or 1715l of this title the insurance commitment for which was issued on or after August 1, 1968, but prior to January 1, 1973, not more than four months after August 3, 1976, and (2) the defect is one that existed on the date of the issuance of the insurance commitment and is one that a proper inspection could reasonably be expected to disclose. The Secretary may require from the seller of any such dwelling an agreement to reimburse him for any payments made pursuant to this subsection with respect to such dwelling. Expenditures pursuant to this subsection shall be made from the insurance fund chargeable for insurance benefits on the mortgage covering the structure to which the expenditures relate. There are hereby authorized to be appropriated such sums as may be necessary to cover the costs of such expenditures not otherwise provided for.

The Secretary shall by regulations prescribe the terms and conditions under which expenditures and payments may be made under the provisions of this section, and his decisions regarding such expenditures or payments, and the terms and conditions under which the same are approved or disapproved, shall be final and conclusive and shall not be subject to judicial review.

(d) Mortgages insured on or after January 1, 1973, but prior to August 1, 1976; requirements; reimbursement from seller; insurance fund chargeable

The Secretary is authorized to make expenditures to correct or to reimburse the owner for the correction of structural or other major defects which so seriously affect use and liveability as to create a serious danger to the life or safety of inhabitants of any one-, two-, three-, or four-family dwelling which is more than one year old on the date of issuance of the insurance commitment, is located in an older, declining urban area, and is covered by a mortgage insured under section 1709 or 1715l of this title on or after January 1, 1973, but prior to August 3, 1976, if (1) the owner requests assistance from the Secretary not more than one year after August 3, 1976, and (2) the defect is one that existed on the date of the issuance of the insurance commitment and is one that a proper inspection could reasonably have been expected to have disclosed. The Secretary may require from the seller of any such dwelling an agreement to reimburse him for any payments made pursuant to this subsection with respect to such dwelling. Expenditures pursuant to this subsection shall be made from the insurance fund chargeable for insurance benefits on the mortgage covering the structure to which the expenditures relate. There are hereby authorized to be appropriated such sums as may be necessary to cover the costs of such expenditures not otherwise provided for.

(e) Report to Congress on effective program for protecting home buyers

The Secretary of Housing and Urban Development is authorized and directed to conduct a full and complete investigation and study and report to Congress, with recommendations, not later than March 1, 1977, with respect to an effective program for protecting home buyers from hidden or undisclosed defects seriously affecting the use and livability of the home, which would be applicable to existing homes financed with mortgages insured under this chapter. In the study and report the Secretary shall particularly investigate the need for, cost and feasible structure of, a national home inspection and warranty program, with respect to such homes, to be operated by the Federal Government out of fees assessed on the home buyer and amortized over a period of two years. The Secretary’s report shall also present an analysis of alternative Federal programs to meet these needs, and the cost and means of financing such programs. In the report the Secretary shall also outline administrative steps which can be taken to provide disclosure to purchasers of existing homes financed with mortgages insured under this chapter of the actual condition of the home and the types of repairs or replacements likely to be needed within a period of two years, such as repairs or replacement of furnace, roof or major appliances, based on age and useful life expectancy of such appurtenances.

(June 27, 1934, ch. 847, title V, § 518, as added Pub. L. 88–560, title I, § 121, Sept. 2, 1964, 78 Stat. 783; amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 91–609, title I, § 104, Dec. 31, 1970, 84 Stat. 1771; Pub. L. 93–383, title III, § 306, Aug. 22, 1974, 88 Stat. 678; Pub. L. 94–50, title III, § 302, July 2, 1975, 89 Stat. 256; Pub. L. 94–375, § 9, Aug. 3, 1976, 90 Stat. 1072; Pub. L. 98–181, title I [title IV, § 427], Nov. 30, 1983, 97 Stat. 1218; Pub. L. 102–550, title V, § 515, Oct. 28, 1992, 106 Stat. 3789.)Editorial NotesAmendments

1992—Subsec. (a). Pub. L. 102–550 substituted par. (1) and “(2) Expenditures under this subsection may be made for” for “The Secretary is authorized, with respect to any property improved by a one- to four-family dwelling that, before the beginning of construction, was approved for mortgage insurance under this chapter or for guaranty, insurance, or a direct loan under chapter 37 of title 38 and that the Secretary finds to have structural defects, to make expenditures for” and redesignated former cls. (1) to (3) appearing before proviso as cls. (A) to (C), respectively, of par. (2).

1983—Subsec. (a). Pub. L. 98–181 substituted “that, before the beginning of construction, was approved for mortgage insurance under this chapter or for guaranty, insurance, or a direct loan under chapter 37 of title 38 and that the Secretary finds” for “approved for mortgage insurance prior to the beginning of construction which he finds”.

1976—Subsec. (b). Pub. L. 94–375, § 9(a), substituted “not more than four months after August 3, 1976” for “not more than 19 months after August 22, 1974”, and provision requiring expenditures be made from the insurance fund chargeable for insurance benefits on the mortgage covering the structure and appropriating sums for expenditures not otherwise covered for provision requiring expenditures be made from the Special Risk Insurance Fund.

Subsecs. (d), (e). Pub. L. 94–375, § 9(b), added subsecs. (d) and (e).

1975—Subsec. (b). Pub. L. 94–50 substituted “one, two, three, or four” for “one or two”, and “not more than 19 months” for “not more than one year”.

1974—Subsec. (b). Pub. L. 93–383 substituted provisions relating to authorization of the Secretary to make expenditures to correct, or to reimburse the owner for the correction of structural or other major defects of covered one or two family dwellings, for provisions relating to the authorization of the Secretary to make expenditures to correct, or to compensate the owner for, structural or other defects of covered single-family dwellings.

1970—Subsecs. (b), (c). Pub. L. 91–609 added subsec. (b) and redesignated former subsec. (b) as (c).

1967—Subsecs. (a), (b). Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing.

Notes of Decisions

Cited in 14 cases, 1973–1993 · leading case: Ernestine Graham, on Behalf of Themselves, & All Others Similarly Situated v. A. B. Caston, Etc., United States of Am., Cross-Appellant, 568 F.2d 1092 (5th Cir. 1978).

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Ernestine Graham, on Behalf of Themselves, & All Others Similarly Situated v. A. B. Caston, Etc., United States of Am., Cross-Appellant, 568 F.2d 1092 (5th Cir. 1978). · cites it 5× “Section 518 of the National Housing Act, 12 U.S.C. § 1735b(a) (1970), 1 authorizes the Secretary of Housing and Urban Development (HUD) in certain instances “to make expenditures for (1) correcting [structural] defects [in a dwelling approved for mortgage insurance, and] (2)…”

Bailey v. Romney, 359 F. Supp. 596 (D.D.C. 1973). · cites it 8× “Plaintiffs attack the validity of the regulations promulgated under 12 U.S.C. § 1735b (c). The establishment of regulations under this law to implement reimbursement for defects is not a discretionary act.”

Lewis v. Hills, 457 F. Supp. 1112 (E.D. Pa. 1978). · cites it 4× “*1114 Plaintiffs 1 originated this class action 2 challenging the procedures used by the defendants (hereinafter HUD, the Secretary, or the government) in processing claims for benefits under Sections 518(b) and (d) of the National Housing Act, 12 U.S.C. §§ 1735b(b), (d).…”

Mrs. Anna Pollard, an Individual v. George W. Romney, Individually, & in His Capacity as Sec'y of Hous. & Urban Dev., 512 F.2d 295 (3rd Cir. 1975). · cites it 4× “Pollard’s attorney “request[ed] that this Court limit its review to Appellant’s claim for relief under 12 U.S.C. § 1735b. . . . Thus, as to Appellant Pollard’s claim for relief review will be based on § 1735b, and any claims for relief primarily based on [section 221(d)(2) made…”

Sara Summers v. United States of Am., 510 F.2d 123 (8th Cir. 1975). · cites it 3× “It amended section 518(b), 12 U.S.C. § 1735b(b), of the National Housing Act to provide compensation for defects in dwellings covered by a mortgage insured under sections 203 or 221(d)(2).”

Manstream v. United States Dep't of Agric., 649 F. Supp. 874 (M.D. Ala. 1986). · cites it 2× “Congress enacted this provision in 1977 to give the Secretary of Agriculture essentially the same authority held by the Secretary of Housing and Urban Development (see 12 U.S.C. § 1735b) with respect to individuals who had purchased defective houses with loans insured by the…”

Owens v. Hills, 450 F. Supp. 218 (N.D. Ill. 1978). · cites it 6× “MEMORANDUM' OPINION FLAUM, District Judge: The instant complaint involves challenges by plaintiffs to the operation by the Department of Housing and Urban Development (HUD) of its construction complaint and structural defect program as authorized by the National Housing Act §…”

Davis v. Romney, 355 F. Supp. 29 (E.D. Pa. 1973). “By their Motion to Dismiss, Defendants contend (1) that this Court does not have jurisdiction to order injunctive or declaratory relief or to grant the right to relief under the Tucker Act, and (2) that plaintiffs have failed to exercise their administrative remedies under 12…”

Jackson v. Lynn, 506 F.2d 233 (D.C. Cir. 1974). “12 U.S.C. § 1735b. The later abortive legislative effort to grant equivalent relief to section 221 mortgagors indicates that the Senate, at least, did not view existing law as entitling section 221 mortgagors of defective houses to redress from the government.”

Jackson v. Romney, 355 F. Supp. 737 (D.D.C. 1973). “12 U.S.C. § 1735b (1970) authorizes expenditures or compensation for defects found in buildings for which the mortgage insurance is approved prior to the start of construction.”

George Kabeller, Inc. v. Busey, 999 F.2d 1417 (11th Cir. 1993). “The statute at issue in Graham removed agency action from judicial review entirely; § 518 of the National Housing Act, 12 U.S.C. § 1735b(c), expressly states that the Secretary’s decision to grant or deny reimbursement is not subject to judicial review.”

Lewis v. Hills, 611 F.2d 464 (3rd Cir. 1979). “This statute authorized HUD to make expenditures on behalf of owners of defective homes, the mortgages of which were insured under the National Housing Act.”

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— 12 U.S.C. § 1735b(a) — 2 cases

Ernestine Graham, on Behalf of Themselves, & All Others Similarly Situated v. A. B. Caston, Etc., United States of Am., Cross-Appellant, 568 F.2d 1092 (5th Cir. 1978). “Section 518 of the National Housing Act, 12 U.S.C. § 1735b(a) (1970), 1 authorizes the Secretary of Housing and Urban Development (HUD) in certain instances “to make expenditures for (1) correcting [structural] defects [in a dwelling approved for mortgage insurance, and] (2)…”

Owens v. Hills, 450 F. Supp. 218 (N.D. Ill. 1978). “MEMORANDUM' OPINION FLAUM, District Judge: The instant complaint involves challenges by plaintiffs to the operation by the Department of Housing and Urban Development (HUD) of its construction complaint and structural defect program as authorized by the National Housing Act §…”

— 12 U.S.C. § 1735b(b) — 7 cases

Bailey v. Romney, 359 F. Supp. 596 (D.D.C. 1973). “Plaintiffs attack the validity of the regulations promulgated under 12 U.S.C. § 1735b (c). The establishment of regulations under this law to implement reimbursement for defects is not a discretionary act.”

Lewis v. Hills, 457 F. Supp. 1112 (E.D. Pa. 1978). “*1114 Plaintiffs 1 originated this class action 2 challenging the procedures used by the defendants (hereinafter HUD, the Secretary, or the government) in processing claims for benefits under Sections 518(b) and (d) of the National Housing Act, 12 U.S.C. §§ 1735b(b), (d).…”

Mrs. Anna Pollard, an Individual v. George W. Romney, Individually, & in His Capacity as Sec'y of Hous. & Urban Dev., 512 F.2d 295 (3rd Cir. 1975). “Pollard’s attorney “request[ed] that this Court limit its review to Appellant’s claim for relief under 12 U.S.C. § 1735b. . . . Thus, as to Appellant Pollard’s claim for relief review will be based on § 1735b, and any claims for relief primarily based on [section 221(d)(2) made…”

Sara Summers v. United States of Am., 510 F.2d 123 (8th Cir. 1975). “It amended section 518(b), 12 U.S.C. § 1735b(b), of the National Housing Act to provide compensation for defects in dwellings covered by a mortgage insured under sections 203 or 221(d)(2).”

— 12 U.S.C. § 1735b(c) — 9 cases

Manstream v. United States Dep't of Agric., 649 F. Supp. 874 (M.D. Ala. 1986). “Congress enacted this provision in 1977 to give the Secretary of Agriculture essentially the same authority held by the Secretary of Housing and Urban Development (see 12 U.S.C. § 1735b) with respect to individuals who had purchased defective houses with loans insured by the…”

— 12 U.S.C. § 1735b(d) — 1 case

— 12 U.S.C. § 1735b(e) — 1 case

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