usc 12 § 1715z–15
Limitation on prepayment of mortgages on multifamily rental housing (BANKS AND BANKING (12 U.S.C.))
Operative Text
During any period in which an owner of a multifamily rental housing project is required to obtain the approval of the Secretary for prepayment of the mortgage, the Secretary shall not accept an offer to prepay the mortgage on such project or permit a termination of an insurance contract pursuant to unless— the Secretary has determined that such project is no longer meeting a need for rental housing for lower income families in the area; the Secretary (A) has determined that the tenants have been notified of the owner’s request for approval of a prepayment; (B) has provided the tenants with an opportunity to comment on the owner’s request; and (C) has taken such comments into consideration; and the Secretary has ensured that there is a plan for providing relocation assistance for adequate, comparable housing for any lower income tenant who will be displaced as a result of the prepayment and withdrawal of the project from the program. A mortgagee may foreclose the mortgage on, or acquire by deed in lieu of foreclosure, any eligible low-income housing project (as such term is defined in ) only if the mortgagee also conveys title to the project to the Secretary in connection with a claim for insurance benefits. For purposes of this section, the term “lower income families” has the meaning given such term in .
Under 12 U.S.C. § 1715z–15, when a multifamily rental housing project owner seeks federal approval to pay off a government-backed mortgage early, the Secretary of Housing and Urban Development may only allow that prepayment under specific conditions. The project must no longer be serving a need for lower-income rental housing in the area, tenants must have been notified and given a chance to comment, and a relocation assistance plan must be in place for any lower-income tenants who would be displaced. Additionally, a lender seeking to foreclose on an eligible low-income housing project must simultaneously transfer title to the Secretary as part of any insurance claim.
Plain English — not legal advice.
Owners of federally insured multifamily rental projects subject to 12 U.S.C. § 1715z–15 who wish to prepay their mortgage generally engage with HUD's approval process well in advance of any planned prepayment. Compliant operators typically provide timely notice to tenants of a prepayment request, allow a meaningful comment period, and work with HUD to establish a relocation assistance plan for any lower-income residents who may be displaced. Lenders and owners involved in foreclosure proceedings on eligible low-income housing projects under this section also coordinate the conveyance of title to the Secretary as a condition of pursuing insurance benefits.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants living in federally insured multifamily rental housing projects have procedural protections under 12 U.S.C. § 1715z–15 when an owner seeks to prepay the project's mortgage. These protections include the right to receive notice of the owner's prepayment request, the opportunity to submit comments that HUD must consider, and an entitlement to a relocation assistance plan providing comparable housing if displacement would result. Tenants who believe these protections have not been followed may consider raising the issue as a defense in relevant proceedings, filing a complaint with HUD, or reaching out to a local tenant-rights organization for guidance on available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 13, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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