12 U.S.C. § 3712

Disposition of sale proceeds

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Money realized from a foreclosure sale shall be made available for obligation and expenditure—(1) first to cover the costs of foreclosure provided for in section 3711 of this title;(2) then to pay valid tax liens or assessments prior to the mortgage;(3) then to pay any liens recorded prior to the recording of the mortgage which are required to be paid in conformity with the terms of sale in the notice of default and foreclosure sale;(4) then to service charges and advancements for taxes, assessments, and property insurance premiums;(5) then to the interest;(6) then to the principal balance secured by the mortgage (including expenditures for the necessary protection, preservation, and repair of the security property as authorized under the mortgage agreement and interest thereon if provided for in the mortgage agreement); and(7) then to late charges.Any surplus after payment of the foregoing shall be paid to holders of liens recorded after the mortgage and then to the appropriate mortgagor. If the person to whom such surplus is to be paid cannot be located, or if the surplus available is insufficient to pay all claimants and the claimants cannot agree on the allocation of the surplus, or if any person claiming an interest in the mortgage proceeds does not agree that some or all of the sale proceeds should be paid to a claimant as provided in this section, that part of the sale proceeds in question may be deposited by the foreclosure commissioner with an appropriate official or court authorized under law to receive disputed funds in such circumstances. If such a procedure for the deposit of disputed funds is not available, and the foreclosure commissioner files a bill of interpleader or is sued as a stakeholder to determine entitlement to such funds, the foreclosure commissioner’s necessary costs in taking or defending such action shall be deductible from the disputed funds.(Pub. L. 97–35, title III, § 369D, Aug. 13, 1981, 95 Stat. 429.)

Notes of Decisions

Cited in 5 cases, 1998–2005 · leading case: Kennedy Heights Apts., Ltd. I v. United States, 48 Fed. Cl. 574 (Fed. Cl. 2001).

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Kennedy Heights Apts., Ltd. I v. United States, 48 Fed. Cl. 574 (Fed. Cl. 2001). · cites it 5× “13, 1996) (not codified in Title 24 of the Code of Federal Regulations), which set out in detail the procedure for foreclosure sales such as the two conducted in this case.”

Kennedy Heights Apts., Ltd. I v. McMillan, 78 F. Supp. 2d 562 (N.D. Tex. 1999). · cites it 3× “The Defendant counters that “the primary objective of Plaintiffs’ claims are not for equitable but monetary relief’ because “Plaintiffs are disputing the costs incurred by HUD while it was in possession of the property prior to foreclosure and contend that there is a surplus of…”

Kennedy Heights Apts. Ltd. I v. United States, 63 Fed. Cl. 731 (Fed. Cl. 2005). · cites it 4× “12 U.S.C. § 3712 (2000). Commissioner McMilhan advised Plaintiffs that there was no surplus because the mortgages on the Projects, coupled with the expenses incurred by HUD in managing the Projects during the MIP period, had exceeded their sale prices.”

Oakbrook Vill. Assocs. v. Cisneros, 25 F. Supp. 2d 730 (E.D. La. 1998). · cites it 2× “12 U.S.C. § 3712 . 1 Oakbrook, as second mort *731 gagee, seeks alleged unsecured, surplus funds from foreclosure sale proceeds in accordance with priorities set forth in § 3712, as well as alleged unsecured funds in a property escrow account not included in the foreclosure…”

C.D. Barnes Assocs., Inc. v. Grand Haven Hideaway Ltd. P'ship, 406 F. Supp. 2d 801 (W.D. Mich. 2005). “12 U.S.C. § 3712 . The Secretary argues that HUD is entitled to all of the foreclosure proceedings under the MMFA’s first-in-time, first-in-right priority rule because the mortgage was recorded on October 18, 2002, and all of the construction liens filed *807 by the…”

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