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R e se r v e Ba n k DALLAS, TEXAS of Dallas 75222 C irc u la r No. 75-117 August 13, 1975 American Revolution Bicentennial EMERGENCY HOUSING AC T OF 1975 TO THE CHIEF EXECUTIVE OFFICER, EACH STATE MEMBER BANK IN THE ELEVENTH FEDERAL RESERVE D ISTRICT: On Ju ly 2, 1975, Public Law 94-50, known as the "Emergency Housing Act of 1975," became effective. T h e Act gives the Department of Housing and Urban Development standby au th o rity to pro vid e up to $250 per month assistance to homeowners who are unable to make full mortgage payments because of a substantial reduction in income, as a result of in voluntary unemployment, or under-em ploym ent due to adverse economic conditions, provided certain stipulated requirem ents a re met. The assist ance may take the form of insurance for loans o r advances from financial institutions or d ire c t loans from HUD on behalf of delinquent mortgagors and is designed to prevent w idespread mortgage foreclosure and d is tressed sales of p roperties. The Department of Housing and Urban De velopment expects to issue regulations dealing w ith the A c t. In addition to the standby authority given HUD, the Act notes the obligations of p r u dent lenders to exercise restrain t on the foreclosure of residential m ort gages where such r e lie f might be available and effective. The Act also charges the Federal su p ervis o ry agencies, until one year from the date of enactment, with respect to financial institutions subject to th eir ju ris d ic tio n , to: (1) "take app ro priate action, not inconsistant with laws relating to the safety or soundness of institution or mort gagee, as the case may be, to waive or relax limitations pertaining to the operations of such institutions or mortgagees with respect to mortgage delinquencies in o rd er to cause or encourage forbearance in residential mortgage loan foreclosures," and (2) "request each such institution or * For the purposes of the Act, residential mortgages include loans on on e -to -fo u r fam ily homes, mobile homes, and single condominium units. In each case, the unit must be the principal residence of the m ortg agor. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - mortgagee to notify that Federal s u p ervis o ry agency, the Secretary of HUD, and the mortgagor at least 30 days p rio r to instituting foreclosure proceedings in connection w ith any mortgage loan." The Federal Reserve, th erefo re, urges each State member bank to review the requirem ents and objectives of the Emergency Housing Act of 1975, together with the long-term prospects for repayment by d e lin quent borrow ers before instituting foreclosure action, in this connection, the System's examiners a re being furnished a copy of this letter and are being instructed to re fra in from c ritic iz in g forbearance in residential mortgage loan foreclosures w here such forbearance does not threaten the safety and soundness of the bank under examination. With respect to the legal requirem ent for notification of intent to foreclose on a residential mortgage loan, you w ill be advised in the near future of the specific information which w ill be re q u ired to fu lfill the notification stipulation. Y our cooperation in this effort w ill be appreciated. S incerely yo u rs , T . W. Plant F irst V ice President
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