The Multifamily Mortgage Foreclosure Act
The Multifamily Mortgage Foreclosure Act (12 U.S.C. 3701--3717) was passed as part of the Omnibus Budget Reconciliation Act of 1981. It allowed the U.S. Department of Housing and Urban Development (HUD) to foreclose on any of its mortgages regardless of individual state laws.
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Avoids "Judicial Foreclosures"
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The law allowed HUD to avoid what are called "judicial foreclosures," those processed through the courts. The agency simply could demand past-due payment with a deadline. Then if payment wasn't received, the agency could put up the property for sale, a "nonjudicial foreclosure." The change shortened the process from years to about 4 months.
Multifamily Defined
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The law defined "multifamily mortgage" as one not including a one- to four-family residence, except when subject to Section 202 of the Housing Act of 1959 (Supportive Housing for the Elderly) or Section 811 (42 U.S.C. 8013) of the National Affordable Housing Act (Supportive Housing for People With Disabilities).
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Foreclosure Requirements
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Before foreclosing on a "multifamily mortgage," HUD was required to give the mortgage holder an opportunity to present his case before serving the notice.
Elements to be considered were the project's original purpose and probable causes of failure or default. Potential repairs and estimated cost along with tenants' income levels also were to be considered along with whether the project would continue serving that demographic after the sale.
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References
- Abstracts: The Multifamily Mortgage Foreclosure Act
- Cornell Univeristy Law School: U.S. Code 3701 Findings and Purpose
- GPO Access: Electronic Code of Federal Regulations
- All-Foreclosure: Judicial and Non-Judicial Foreclosures
- National Low Income Housing Coalition: Section 202 Supportive Housing for the Elderly
Resources
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