usc 12 § 1715z–4
Modifications in terms of mortgages covering multifamily projects; requests for extensions to cure defaults or for modification of mortgage terms; regulations (BANKS AND BANKING (12 U.S.C.))
Operative Text
The Secretary shall not consent to any request for an extension of the time for curing a default under any mortgage covering multifamily housing, as defined in the regulations of the Secretary, or for a modification of the terms of such mortgage, except in conformity with regulations prescribed by the Secretary in accordance with the provisions of this section. Such regulations shall require, as a condition to the granting of any such request, that, during the period of such extension or modification, any part of the rents or other funds derived by the mortgagor from the property covered by the mortgage which is not required to meet actual and necessary expenses arising in connection with the operation of such property, including amortization charges under the mortgage, be held in trust by the mortgagor and distributed only with the consent of the Secretary; except that the Secretary may provide for the granting of consent to any request for an extension of the time for curing a default under any mortgage covering multifamily housing, or for a modification of the term of such mortgage, without regard to the foregoing requirement, in any case or class of cases in which an exemption from such requirement does not (as determined by the Secretary) jeopardize the interests of the United States.
Under 12 U.S.C. § 1715z–4, the Secretary of Housing and Urban Development may only approve requests to extend the time for curing a mortgage default or to modify the terms of a federally backed multifamily housing mortgage if those approvals follow the Secretary's own regulations. As a general condition of any such approval, surplus rents and other property revenues—meaning funds beyond what is genuinely needed to operate the property—must be held in trust by the borrower and released only with the Secretary's consent. The Secretary retains discretion to waive this trust requirement in specific cases or categories of cases where doing so would not harm the interests of the United States.
Plain English — not legal advice.
Operators of federally insured multifamily properties who find themselves in default or seeking modified mortgage terms should understand that 12 U.S.C. § 1715z–4 places the approval authority squarely with the Secretary, and only within the bounds of HUD's published regulations. A compliant operator seeking relief under this provision generally documents all actual and necessary operating expenses carefully, since excess revenues must be held in trust and disbursed only upon HUD's consent during any approved extension or modification period. Operators typically work closely with HUD asset managers and review applicable HUD regulations to understand whether their situation might qualify for an exemption from the trust requirement.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For tenants living in federally insured multifamily housing, 12 U.S.C. § 1715z–4 is relevant because it governs how a property owner may handle surplus rental income when the property's mortgage is in default or undergoing modification—funds beyond operating costs must generally be held in trust rather than freely distributed. This provision is designed in part to protect the financial integrity of the property during periods of financial stress, which can affect housing stability for residents. Tenants who have concerns about property conditions or financial mismanagement during a default period may consider reaching out to a local tenant-rights organization, a HUD-approved housing counselor, or a rent board if one exists in their jurisdiction to understand what oversight mechanisms may apply.
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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