US (United States) Code. Title 12. Chapter 27: Real estate settlement procedures

Codificación normativa de EEUU (Estados Unidos). Legislación federal estadounidense # Banks and baking

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-CITE-

12 USC CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

.

-HEAD-

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-MISC1-

Sec.

2601. Congressional findings and purpose.

2602. Definitions.

2603. Uniform settlement statement.

2604. Special information booklets.

(a) Distribution by Secretary to lenders to help

borrowers.

(b) Form and detail; cost elements, standard

settlement form, escrow accounts, selection of

persons for settlement services; consideration

of differences in settlement procedures.

(c) Estimate of charges.

(d) Distribution by lenders to loan applicants at

time of receipt or preparation of applications.

(e) Printing and distribution by lenders of booklets

approved by Secretary.

2605. Servicing of mortgage loans and administration of escrow

accounts.

(a) Disclosure to applicant relating to assignment,

sale, or transfer of loan servicing.

(b) Notice by transferor of loan servicing at time of

transfer.

(c) Notice by transferee of loan servicing at time of

transfer.

(d) Treatment of loan payments during transfer

period.

(e) Duty of loan servicer to respond to borrower

inquiries.

(f) Damages and costs.

(g) Administration of escrow accounts.

(h) Preemption of conflicting State laws.

(i) Definitions.

(j) Transition.

2606. Exempted transactions.

(a) In general.

(b) Interpretation.

2607. Prohibition against kickbacks and unearned fees.

(a) Business referrals.

(b) Splitting charges.

(c) Fees, salaries, compensation, or other payments.

(d) Penalties for violations; joint and several

liability; treble damages; actions for

injunction by Secretary and by State officials;

costs and attorney fees; construction of State

laws.

2608. Title companies; liability of seller.

2609. Limitation on requirement of advance deposits in escrow

accounts.

(a) In general.

(b) Notification of shortage in escrow account.

(c) Escrow account statements.

(d) Penalties.

2610. Prohibition of fees for preparation of truth-in-lending,

uniform settlement, and escrow account statements.

2611 to 2613. Repealed.

2614. Jurisdiction of courts; limitations.

2615. Contracts and liens; validity.

2616. State laws unaffected; inconsistent Federal and State

provisions.

2617. Authority of Secretary.

(a) Issuance of regulations; exemptions.

(b) Liability for acts done in good faith in

conformity with rule, regulation, or

interpretation.

(c) Investigations; hearings; failure to obey order;

contempt.

(d) Delay of effectiveness of recent final regulation

relating to payments to employees.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in section 4903 of this title; title

15 section 1638; title 42 sections 3541, 4012a, 8232.

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12 USC Sec. 2601 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2601. Congressional findings and purpose

-STATUTE-

(a) The Congress finds that significant reforms in the real

estate settlement process are needed to insure that consumers

throughout the Nation are provided with greater and more timely

information on the nature and costs of the settlement process and

are protected from unnecessarily high settlement charges caused by

certain abusive practices that have developed in some areas of the

country. The Congress also finds that it has been over two years

since the Secretary of Housing and Urban Development and the

Administrator of Veterans' Affairs submitted their joint report to

the Congress on ''Mortgage Settlement Costs'' and that the time has

come for the recommendations for Federal legislative action made in

that report to be implemented.

(b) It is the purpose of this chapter to effect certain changes

in the settlement process for residential real estate that will

result -

(1) in more effective advance disclosure to home buyers and

sellers of settlement costs;

(2) in the elimination of kickbacks or referral fees that tend

to increase unnecessarily the costs of certain settlement

services;

(3) in a reduction in the amounts home buyers are required to

place in escrow accounts established to insure the payment of

real estate taxes and insurance; and

(4) in significant reform and modernization of local

recordkeeping of land title information.

-SOURCE-

(Pub. L. 93-533, Sec. 2, Dec. 22, 1974, 88 Stat. 1724.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsec. (b), was in the original

''this Act'', meaning Pub. L. 93-533, Dec. 22, 1974, 88 Stat. 1724,

as amended, known as the Real Estate Settlement Procedures Act of

1974, which is classified principally to this chapter (Sec. 2601 et

seq.). For complete classification of this Act to the Code, see

Short Title note below and Tables.

-CHANGE-

CHANGE OF NAME

Reference to Administrator of Veterans' Affairs deemed to refer

to Secretary of Veterans Affairs pursuant to section 10 of Pub. L.

100-527, set out as a Department of Veterans Affairs Act note under

section 301 of Title 38, Veterans' Benefits.

-MISC4-

EFFECTIVE DATE

Section 20, formerly 19, of Pub. L. 93-533, as renumbered by Pub.

L. 94-205, Sec. 10, Jan. 2, 1976, 89 Stat. 1159, provided that:

''The provisions of this Act, and the amendments made thereby (see

Short Title note below), shall become effective one hundred and

eighty days after the date of the enactment of this Act (Dec. 22,

1974).''

SHORT TITLE OF 1976 AMENDMENT

Section 1 of Pub. L. 94-205, Jan. 2, 1976, 89 Stat. 1157,

provided: ''That this Act (enacting section 2617 of this title,

amending sections 2602, 2603, 2604, 2607, 2609 and 2616 of this

title and section 1631 of Title 15, Commerce and Trade, repealing

sections 2605 and 2606 of this title, enacting provisions set out

as a note under section 2602 of this title and amending provisions

set out as a note under this section) may be cited as the 'Real

Estate Settlement Procedures Act Amendments of 1975'.''

SHORT TITLE

Section 1 of Pub. L. 93-533 provided that: ''This Act (enacting

this chapter and sections 1730f and 1831b of this title and

provisions set out as notes under this section and section 1730f of

this title) may be cited as the 'Real Estate Settlement Procedures

Act of 1974'.''

SIMPLIFICATION AND UNIFICATION OF DISCLOSURES REQUIRED UNDER RESPA

AND TILA FOR MORTGAGE TRANSACTIONS

Pub. L. 104-208, div. A, title II, Sec. 2101, Sept. 30, 1996,

110 Stat. 3009-398, provided that:

''(a) In General. - With respect to credit transactions which are

subject to the Real Estate Settlement Procedures Act of 1974 (12

U.S.C. 2601 et seq.) and the Truth in Lending Act (15 U.S.C. 1601

et seq.), the Board of Governors of the Federal Reserve System

(hereafter in this section referred to as the 'Board') and the

Secretary of Housing and Urban Development (hereafter in this

section referred to as the 'Secretary') shall take such action as

may be necessary before the end of the 6-month period beginning on

the date of enactment of this Act (Sept. 30, 1996) -

''(1) to simplify and improve the disclosures applicable to

such transactions under such Acts, including the timing of the

disclosures; and

''(2) to provide a single format for such disclosures which

will satisfy the requirements of each such Act with respect to

such transactions.

''(b) Regulations. - To the extent that it is necessary to

prescribe any regulation in order to effect any changes required to

be made under subsection (a), the proposed regulation shall be

published in the Federal Register before the end of the 6-month

period referred to in subsection (a).

''(c) Recommendations for Legislation. - If the Board and the

Secretary find that legislative action may be necessary or

appropriate in order to simplify and unify the disclosure

requirements under the Real Estate Settlement Procedures Act of

1974 (12 U.S.C. 2601 et seq.) and the Truth in Lending Act (15

U.S.C. 1601 et seq.), the Board and the Secretary shall submit a

report containing recommendations to the Congress concerning such

action.''

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12 USC Sec. 2602 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2602. Definitions

-STATUTE-

For purposes of this chapter -

(1) the term ''federally related mortgage loan'' includes any

loan (other than temporary financing such as a construction loan)

which -

(A) is secured by a first or subordinate lien on residential

real property (including individual units of condominiums and

cooperatives) designed principally for the occupancy of from

one to four families, including any such secured loan, the

proceeds of which are used to prepay or pay off an existing

loan secured by the same property; and

(B)(i) is made in whole or in part by any lender the deposits

or accounts of which are insured by any agency of the Federal

Government, or is made in whole or in part by any lender which

is regulated by any agency of the Federal Government, or

(ii) is made in whole or in part, or insured, guaranteed,

supplemented, or assisted in any way, by the Secretary or any

other officer or agency of the Federal Government or under or

in connection with a housing or urban development program

administered by the Secretary or a housing or related program

administered by any other such officer or agency; or

(iii) is intended to be sold by the originating lender to the

Federal National Mortgage Association, the Government National

Mortgage Association, the Federal Home Loan Mortgage

Corporation, or a financial institution from which it is to be

purchased by the Federal Home Loan Mortgage Corporation; or

(iv) is made in whole or in part by any ''creditor'', as

defined in section 1602(f) of title 15, who makes or invests in

residential real estate loans aggregating more than $1,000,000

per year, except that for the purpose of this chapter, the term

''creditor'' does not include any agency or instrumentality of

any State;

(2) the term ''thing of value'' includes any payment, advance,

funds, loan, service, or other consideration;

(3) the term ''Settlement services'' includes any service

provided in connection with a real estate settlement including,

but not limited to, the following: title searches, title

examinations, the provision of title certificates, title

insurance, services rendered by an attorney, the preparation of

documents, property surveys, the rendering of credit reports or

appraisals, pest and fungus inspections, services rendered by a

real estate agent or broker, the origination of a federally

related mortgage loan (including, but not limited to, the taking

of loan applications, loan processing, and the underwriting and

funding of loans), and the handling of the processing, and

closing or settlement;

(4) the term ''title company'' means any institution which is

qualified to issue title insurance, directly or through its

agents, and also refers to any duly authorized agent of a title

company;

(5) the term ''person'' includes individuals, corporations,

associations, partnerships, and trusts;

(6) the term ''Secretary'' means the Secretary of Housing and

Urban Development;

(7) the term ''affiliated business arrangement'' means an

arrangement in which (A) a person who is in a position to refer

business incident to or a part of a real estate settlement

service involving a federally related mortgage loan, or an

associate of such person, has either an affiliate relationship

with or a direct or beneficial ownership interest of more than 1

percent in a provider of settlement services; and (B) either of

such persons directly or indirectly refers such business to that

provider or affirmatively influences the selection of that

provider; and

(8) the term ''associate'' means one who has one or more of the

following relationships with a person in a position to refer

settlement business: (A) a spouse, parent, or child of such

person; (B) a corporation or business entity that controls, is

controlled by, or is under common control with such person; (C)

an employer, officer, director, partner, franchisor, or

franchisee of such person; or (D) anyone who has an agreement,

arrangement, or understanding, with such person, the purpose or

substantial effect of which is to enable the person in a position

to refer settlement business to benefit financially from the

referrals of such business.

-SOURCE-

(Pub. L. 93-533, Sec. 3, Dec. 22, 1974, 88 Stat. 1724; Pub. L.

94-205, Sec. 2, Jan. 2, 1976, 89 Stat. 1157; Pub. L. 98-181, title

IV, Sec. 461(a), Nov. 30, 1983, 97 Stat. 1230; Pub. L. 102-550,

title IX, Sec. 908(a), (b), Oct. 28, 1992, 106 Stat. 3873, 3874;

Pub. L. 104-208, div. A, title II, Sec. 2103(c)(1), Sept. 30,

1996, 110 Stat. 3009-400.)

-MISC1-

AMENDMENTS

1996 - Par. (7). Pub. L. 104-208 substituted ''affiliated

business arrangement'' for ''controlled business arrangement''.

1992 - Par. (1)(A). Pub. L. 102-550, Sec. 908(b), inserted ''or

subordinate'' after ''first'' and '', including any such secured

loan, the proceeds of which are used to prepay or pay off an

existing loan secured by the same property'' after ''families''.

Par. (3). Pub. L. 102-550, Sec. 908(a), inserted ''the

origination of a federally related mortgage loan (including, but

not limited to, the taking of loan applications, loan processing,

and the underwriting and funding of loans),'' after ''broker,''.

1983 - Pars. (7), (8). Pub. L. 98-181 added pars. (7) and (8).

1976 - Par. (1). Pub. L. 94-205, Sec. 2(1), inserted ''(other

than temporary financing such as a construction loan)'' in

introductory text.

Par. (1)(A). Pub. L. 94-205, Sec. 2(2), inserted ''a first lien

on'' after ''is secured by''.

Par. (1)(B)(iii). Pub. L. 94-205, Sec. 2(3)-(5), substituted ''is

intended to be sold by the originating lender to'' for ''is

eligible for purchase by'' and ''a'' and ''is to'' for ''from any''

and ''could'', respectively, and struck out ''or'' after ''the

Government National Mortgage Association''.

Par. (1)(B)(iv). Pub. L. 94-205, Sec. 2(6), inserted '', except

that for the purpose of this chapter, the term 'creditor' does not

include any agency or instrumentality of any State'' after ''more

than $1,000,000 per year''.

EFFECTIVE DATE OF 1992 AMENDMENT

Section 908(d) of Pub. L. 102-550 provided that: ''This section

(amending this section and enacting provisions set out below) shall

take effect on the date of enactment of this Act (Oct. 28, 1992)

and shall not apply retroactively.''

EFFECTIVE DATE OF 1983 AMENDMENT

Section 461(f) of Pub. L. 98-181 provided that: ''The amendments

made by this section (amending this section and sections 2607,

2614, and 2617 of this title) shall become effective on January 1,

1984.''

EFFECTIVE DATE OF 1976 AMENDMENT

Section 12 of Pub. L. 94-205 provided that: ''The provisions of

this Act and the amendments made hereby (enacting section 2617 of

this title, amending this section, sections 2603, 2604, 2607, 2609,

and 2616 of this title, and section 1631 of Title 15, Commerce and

Trade, repealing sections 2605 and 2606 of this title, and enacting

and amending provisions set out as notes under section 2601 of this

title) shall become effective upon enactment (Jan. 2, 1976). The

Secretary may suspend for up to one hundred and eighty days from

the date of enactment of this Act (Jan. 2, 1976) any provision of

section 4 and section 5 of the Real Estate Settlement Procedures

Act of 1974 (sections 2603 and 2604 of this title), as amended by

this Act.''

REGULATIONS

Section 908(c) of Pub. L. 102-550 provided that: ''The Secretary

of Housing and Urban Development shall issue regulations to

implement the amendments made by this section (amending this

section) not later than the expiration of the 180-day period

beginning on the date of the enactment of this Act (Oct. 28, 1992).

The regulations shall be issued after notice and opportunity for

public comment pursuant to the provisions of section 553 of title

5, United States Code (notwithstanding subsections (a)(2), (b)(B),

and (d)(3) of such section).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 15 section 6603.

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12 USC Sec. 2603 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2603. Uniform settlement statement

-STATUTE-

(a) The Secretary, in consultation with the Administrator of

Veteran's Affairs, the Federal Deposit Insurance Corporation, and

the Director of the Office of Thrift Supervision, shall develop and

prescribe a standard form for the statement of settlement costs

which shall be used (with such variations as may be necessary to

reflect differences in legal and administrative requirements or

practices in different areas of the country) as the standard real

estate settlement form in all transactions in the United States

which involve federally related mortgage loans. Such form shall

conspicuously and clearly itemize all charges imposed upon the

borrower and all charges imposed upon the seller in connection with

the settlement and shall indicate whether any title insurance

premium included in such charges covers or insures the lender's

interest in the property, the borrower's interest, or both. The

Secretary may, by regulation, permit the deletion from the form

prescribed under this section of items which are not, under local

laws or customs, applicable in any locality, except that such

regulation shall require that the numerical code prescribed by the

Secretary be retained in forms to be used in all localities.

Nothing in this section may be construed to require that that part

of the standard form which relates to the borrower's transaction be

furnished to the seller, or to require that that part of the

standard form which relates to the seller be furnished to the

borrower.

(b) The form prescribed under this section shall be completed and

made available for inspection by the borrower at or before

settlement by the person conducting the settlement, except that (1)

the Secretary may exempt from the requirements of this section

settlements occurring in localities where the final settlement

statement is not customarily provided at or before the date of

settlement, or settlements where such requirements are impractical

and (2) the borrower may, in accordance with regulations of the

Secretary, waive his right to have the form made available at such

time. Upon the request of the borrower to inspect the form

prescribed under this section during the business day immediately

preceding the day of settlement, the person who will conduct the

settlement shall permit the borrower to inspect those items which

are known to such person during such preceding day.

-SOURCE-

(Pub. L. 93-533, Sec. 4, Dec. 22, 1974, 88 Stat. 1725; Pub. L.

94-205, Sec. 3, Jan. 2, 1976, 89 Stat. 1157; Pub. L. 104-208, div.

A, title II, Sec. 2103(g)(1), Sept. 30, 1996, 110 Stat. 3009-401.)

-MISC1-

AMENDMENTS

1996 - Subsec. (a). Pub. L. 104-208 substituted ''Director of the

Office of Thrift Supervision'' for ''Federal Home Loan Bank

Board''.

1976 - Subsec. (a). Pub. L. 94-205, Sec. 3(1)-(3), designated

existing provisions as subsec. (a), struck out ''minimum'' after

''with such'' and ''unavoidable'' after ''necessary to reflect'' in

parenthetical provisions covering allowable regional variations in

the uniform settlement statement, and substituted provisions

authorizing the Secretary to permit deletions from the standard

form for provisions requiring that the standard form contain all

the information and data required under the Truth in Lending Act.

Subsec. (b). Pub. L. 94-205, Sec. 3(4), added subsec. (b).

-CHANGE-

CHANGE OF NAME

Reference to Administrator of Veterans' Affairs deemed to refer

to Secretary of Veterans Affairs pursuant to section 10 of Pub. L.

100-527, set out as a Department of Veterans Affairs Act note under

section 301 of Title 38, Veterans' Benefits.

-MISC4-

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-205 effective Jan. 2, 1976, with the

Secretary authorized to suspend for up to 180 days from Jan. 2,

1976, any provision of this section as amended by Pub. L. 94-205,

see section 12 of Pub. L. 94-205, set out as a note under section

2602 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2604, 2609, 2610 of this

title.

-CITE-

12 USC Sec. 2604 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2604. Special information booklets

-STATUTE-

(a) Distribution by Secretary to lenders to help borrowers

The Secretary shall prepare and distribute booklets to help

persons borrowing money to finance the purchase of residential real

estate better to understand the nature and costs of real estate

settlement services. The Secretary shall distribute such booklets

to all lenders which make federally related mortgage loans.

(b) Form and detail; cost elements, standard settlement form,

escrow accounts, selection of persons for settlement services;

consideration of differences in settlement procedures

Each booklet shall be in such form and detail as the Secretary

shall prescribe and, in addition to such other information as the

Secretary may provide, shall include in clear and concise language

-

(1) a description and explanation of the nature and purpose of

each cost incident to a real estate settlement;

(2) an explanation and sample of the standard real estate

settlement form developed and prescribed under section 2603 of

this title;

(3) a description and explanation of the nature and purpose of

escrow accounts when used in connection with loans secured by

residential real estate;

(4) an explanation of the choices available to buyers of

residential real estate in selecting persons to provide necessary

services incident to a real estate settlement; and

(5) an explanation of the unfair practices and unreasonable or

unnecessary charges to be avoided by the prospective buyer with

respect to a real estate settlement.

Such booklets shall take into consideration differences in real

estate settlement procedures which may exist among the several

States and territories of the United States and among separate

political subdivisions within the same State and territory.

(c) Estimate of charges

Each lender shall include with the booklet a good faith estimate

of the amount or range of charges for specific settlement services

the borrower is likely to incur in connection with the settlement

as prescribed by the Secretary.

(d) Distribution by lenders to loan applicants at time of receipt

or preparation of applications

Each lender referred to in subsection (a) of this section shall

provide the booklet described in such subsection to each person

from whom it receives or for whom it prepares a written application

to borrow money to finance the purchase of residential real

estate. Such booklet shall be provided by delivering it or placing

it in the mail not later than 3 business days after the lender

receives the application, but no booklet need be provided if the

lender denies the application for credit before the end of the

3-day period.

(e) Printing and distribution by lenders of booklets approved by

Secretary

Booklets may be printed and distributed by lenders if their form

and content are approved by the Secretary as meeting the

requirements of subsection (b) of this section.

-SOURCE-

(Pub. L. 93-533, Sec. 5, Dec. 22, 1974, 88 Stat. 1725; Pub. L.

94-205, Sec. 4, Jan. 2, 1976, 89 Stat. 1158; Pub. L. 102-550, title

IX, Sec. 951, Oct. 28, 1992, 106 Stat. 3892.)

-MISC1-

AMENDMENTS

1992 - Subsec. (d). Pub. L. 102-550 substituted ''Such booklet

shall be provided by delivering it or placing it in the mail not

later than 3 business days after the lender receives the

application, but no booklet need be provided if the lender denies

the application for credit before the end of the 3-day period.''

for ''Such booklet shall be provided at the time of receipt or

preparation of such application.''

1976 - Subsecs. (c) to (e). Pub. L. 94-205 added subsec. (c),

redesignated former subsec. (c) as (d), substituted ''or for whom

it prepares a written application'' for ''an application'' and

inserted ''or preparation'' after ''receipt'', and redesignated

former subsec. (d) as (e).

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-205 effective Jan. 2, 1976, with the

Secretary authorized to suspend for up to 180 days from Jan. 2,

1976, any provision of this section as amended by Pub. L. 94-205,

see section 12 of Pub. L. 94-205, set out as a note under section

2602 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2607 of this title.

-CITE-

12 USC Sec. 2605 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2605. Servicing of mortgage loans and administration of escrow

accounts

-STATUTE-

(a) Disclosure to applicant relating to assignment, sale, or

transfer of loan servicing

Each person who makes a federally related mortgage loan shall

disclose to each person who applies for the loan, at the time of

application for the loan, whether the servicing of the loan may be

assigned, sold, or transferred to any other person at any time

while the loan is outstanding.

(b) Notice by transferor of loan servicing at time of transfer

(1) Notice requirement

Each servicer of any federally related mortgage loan shall

notify the borrower in writing of any assignment, sale, or

transfer of the servicing of the loan to any other person.

(2) Time of notice

(A) In general

Except as provided under subparagraphs (B) and (C), the

notice required under paragraph (1) shall be made to the

borrower not less than 15 days before the effective date of

transfer of the servicing of the mortgage loan (with respect to

which such notice is made).

(B) Exception for certain proceedings

The notice required under paragraph (1) shall be made to the

borrower not more than 30 days after the effective date of

assignment, sale, or transfer of the servicing of the mortgage

loan (with respect to which such notice is made) in any case in

which the assignment, sale, or transfer of the servicing of the

mortgage loan is preceded by -

(i) termination of the contract for servicing the loan for

cause;

(ii) commencement of proceedings for bankruptcy of the

servicer; or

(iii) commencement of proceedings by the Federal Deposit

Insurance Corporation or the Resolution Trust Corporation for

conservatorship or receivership of the servicer (or an entity

by which the servicer is owned or controlled).

(C) Exception for notice provided at closing

The provisions of subparagraphs (A) and (B) shall not apply

to any assignment, sale, or transfer of the servicing of any

mortgage loan if the person who makes the loan provides to the

borrower, at settlement (with respect to the property for which

the mortgage loan is made), written notice under paragraph (3)

of such transfer.

(3) Contents of notice

The notice required under paragraph (1) shall include the

following information:

(A) The effective date of transfer of the servicing described

in such paragraph.

(B) The name, address, and toll-free or collect call

telephone number of the transferee servicer.

(C) A toll-free or collect call telephone number for (i) an

individual employed by the transferor servicer, or (ii) the

department of the transferor servicer, that can be contacted by

the borrower to answer inquiries relating to the transfer of

servicing.

(D) The name and toll-free or collect call telephone number

for (i) an individual employed by the transferee servicer, or

(ii) the department of the transferee servicer, that can be

contacted by the borrower to answer inquiries relating to the

transfer of servicing.

(E) The date on which the transferor servicer who is

servicing the mortgage loan before the assignment, sale, or

transfer will cease to accept payments relating to the loan and

the date on which the transferee servicer will begin to accept

such payments.

(F) Any information concerning the effect the transfer may

have, if any, on the terms of or the continued availability of

mortgage life or disability insurance or any other type of

optional insurance and what action, if any, the borrower must

take to maintain coverage.

(G) A statement that the assignment, sale, or transfer of the

servicing of the mortgage loan does not affect any term or

condition of the security instruments other than terms directly

related to the servicing of such loan.

(c) Notice by transferee of loan servicing at time of transfer

(1) Notice requirement

Each transferee servicer to whom the servicing of any federally

related mortgage loan is assigned, sold, or transferred shall

notify the borrower of any such assignment, sale, or transfer.

(2) Time of notice

(A) In general

Except as provided in subparagraphs (B) and (C), the notice

required under paragraph (1) shall be made to the borrower not

more than 15 days after the effective date of transfer of the

servicing of the mortgage loan (with respect to which such

notice is made).

(B) Exception for certain proceedings

The notice required under paragraph (1) shall be made to the

borrower not more than 30 days after the effective date of

assignment, sale, or transfer of the servicing of the mortgage

loan (with respect to which such notice is made) in any case in

which the assignment, sale, or transfer of the servicing of the

mortgage loan is preceded by -

(i) termination of the contract for servicing the loan for

cause;

(ii) commencement of proceedings for bankruptcy of the

servicer; or

(iii) commencement of proceedings by the Federal Deposit

Insurance Corporation or the Resolution Trust Corporation for

conservatorship or receivership of the servicer (or an entity

by which the servicer is owned or controlled).

(C) Exception for notice provided at closing

The provisions of subparagraphs (A) and (B) shall not apply

to any assignment, sale, or transfer of the servicing of any

mortgage loan if the person who makes the loan provides to the

borrower, at settlement (with respect to the property for which

the mortgage loan is made), written notice under paragraph (3)

of such transfer.

(3) Contents of notice

Any notice required under paragraph (1) shall include the

information described in subsection (b)(3) of this section.

(d) Treatment of loan payments during transfer period

During the 60-day period beginning on the effective date of

transfer of the servicing of any federally related mortgage loan, a

late fee may not be imposed on the borrower with respect to any

payment on such loan and no such payment may be treated as late for

any other purposes, if the payment is received by the transferor

servicer (rather than the transferee servicer who should properly

receive payment) before the due date applicable to such payment.

(e) Duty of loan servicer to respond to borrower inquiries

(1) Notice of receipt of inquiry

(A) In general

If any servicer of a federally related mortgage loan receives

a qualified written request from the borrower (or an agent of

the borrower) for information relating to the servicing of such

loan, the servicer shall provide a written response

acknowledging receipt of the correspondence within 20 days

(excluding legal public holidays, Saturdays, and Sundays)

unless the action requested is taken within such period.

(B) Qualified written request

For purposes of this subsection, a qualified written request

shall be a written correspondence, other than notice on a

payment coupon or other payment medium supplied by the

servicer, that -

(i) includes, or otherwise enables the servicer to

identify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief of

the borrower, to the extent applicable, that the account is

in error or provides sufficient detail to the servicer

regarding other information sought by the borrower.

(2) Action with respect to inquiry

Not later than 60 days (excluding legal public holidays,

Saturdays, and Sundays) after the receipt from any borrower of

any qualified written request under paragraph (1) and, if

applicable, before taking any action with respect to the inquiry

of the borrower, the servicer shall -

(A) make appropriate corrections in the account of the

borrower, including the crediting of any late charges or

penalties, and transmit to the borrower a written notification

of such correction (which shall include the name and telephone

number of a representative of the servicer who can provide

assistance to the borrower);

(B) after conducting an investigation, provide the borrower

with a written explanation or clarification that includes -

(i) to the extent applicable, a statement of the reasons

for which the servicer believes the account of the borrower

is correct as determined by the servicer; and

(ii) the name and telephone number of an individual

employed by, or the office or department of, the servicer who

can provide assistance to the borrower; or

(C) after conducting an investigation, provide the borrower

with a written explanation or clarification that includes -

(i) information requested by the borrower or an explanation

of why the information requested is unavailable or cannot be

obtained by the servicer; and

(ii) the name and telephone number of an individual

employed by, or the office or department of, the servicer who

can provide assistance to the borrower.

(3) Protection of credit rating

During the 60-day period beginning on the date of the

servicer's receipt from any borrower of a qualified written

request relating to a dispute regarding the borrower's payments,

a servicer may not provide information regarding any overdue

payment, owed by such borrower and relating to such period or

qualified written request, to any consumer reporting agency (as

such term is defined under section 1681a of title 15).

(f) Damages and costs

Whoever fails to comply with any provision of this section shall

be liable to the borrower for each such failure in the following

amounts:

(1) Individuals

In the case of any action by an individual, an amount equal to

the sum of -

(A) any actual damages to the borrower as a result of the

failure; and

(B) any additional damages, as the court may allow, in the

case of a pattern or practice of noncompliance with the

requirements of this section, in an amount not to exceed

$1,000.

(2) Class actions

In the case of a class action, an amount equal to the sum of -

(A) any actual damages to each of the borrowers in the class

as a result of the failure; and

(B) any additional damages, as the court may allow, in the

case of a pattern or practice of noncompliance with the

requirements of this section, in an amount not greater than

$1,000 for each member of the class, except that the total

amount of damages under this subparagraph in any class action

may not exceed the lesser of -

(i) $500,000; or

(ii) 1 percent of the net worth of the servicer.

(3) Costs

In addition to the amounts under paragraph (1) or (2), in the

case of any successful action under this section, the costs of

the action, together with any attorneys fees incurred in

connection with such action as the court may determine to be

reasonable under the circumstances.

(4) Nonliability

A transferor or transferee servicer shall not be liable under

this subsection for any failure to comply with any requirement

under this section if, within 60 days after discovering an error

(whether pursuant to a final written examination report or the

servicer's own procedures) and before the commencement of an

action under this subsection and the receipt of written notice of

the error from the borrower, the servicer notifies the person

concerned of the error and makes whatever adjustments are

necessary in the appropriate account to ensure that the person

will not be required to pay an amount in excess of any amount

that the person otherwise would have paid.

(g) Administration of escrow accounts

If the terms of any federally related mortgage loan require the

borrower to make payments to the servicer of the loan for deposit

into an escrow account for the purpose of assuring payment of

taxes, insurance premiums, and other charges with respect to the

property, the servicer shall make payments from the escrow account

for such taxes, insurance premiums, and other charges in a timely

manner as such payments become due.

(h) Preemption of conflicting State laws

Notwithstanding any provision of any law or regulation of any

State, a person who makes a federally related mortgage loan or a

servicer shall be considered to have complied with the provisions

of any such State law or regulation requiring notice to a borrower

at the time of application for a loan or transfer of the servicing

of a loan if such person or servicer complies with the requirements

under this section regarding timing, content, and procedures for

notification of the borrower.

(i) Definitions

For purposes of this section:

(1) Effective date of transfer

The term ''effective date of transfer'' means the date on which

the mortgage payment of a borrower is first due to the transferee

servicer of a mortgage loan pursuant to the assignment, sale, or

transfer of the servicing of the mortgage loan.

(2) Servicer

The term ''servicer'' means the person responsible for

servicing of a loan (including the person who makes or holds a

loan if such person also services the loan). The term does not

include -

(A) the Federal Deposit Insurance Corporation or the

Resolution Trust Corporation, in connection with assets

acquired, assigned, sold, or transferred pursuant to section

1823(c) of this title or as receiver or conservator of an

insured depository institution; and

(B) the Government National Mortgage Association, the Federal

National Mortgage Association, the Federal Home Loan Mortgage

Corporation, the Resolution Trust Corporation, or the Federal

Deposit Insurance Corporation, in any case in which the

assignment, sale, or transfer of the servicing of the mortgage

loan is preceded by -

(i) termination of the contract for servicing the loan for

cause;

(ii) commencement of proceedings for bankruptcy of the

servicer; or

(iii) commencement of proceedings by the Federal Deposit

Insurance Corporation or the Resolution Trust Corporation for

conservatorship or receivership of the servicer (or an entity

by which the servicer is owned or controlled).

(3) Servicing

The term ''servicing'' means receiving any scheduled periodic

payments from a borrower pursuant to the terms of any loan,

including amounts for escrow accounts described in section 2609

of this title, and making the payments of principal and interest

and such other payments with respect to the amounts received from

the borrower as may be required pursuant to the terms of the

loan.

(j) Transition

(1) Originator liability

A person who makes a federally related mortgage loan shall not

be liable to a borrower because of a failure of such person to

comply with subsection (a) of this section with respect to an

application for a loan made by the borrower before the

regulations referred to in paragraph (3) take effect.

(2) Servicer liability

A servicer of a federally related mortgage loan shall not be

liable to a borrower because of a failure of the servicer to

perform any duty under subsection (b), (c), (d), or (e) of this

section that arises before the regulations referred to in

paragraph (3) take effect.

(3) Regulations and effective date

The Secretary shall, by regulations that shall take effect not

later than April 20, 1991, establish any requirements necessary

to carry out this section. Such regulations shall include the

model disclosure statement required under subsection (a)(2) of

this section.

-SOURCE-

(Pub. L. 93-533, Sec. 6, as added Pub. L. 101-625, title IX, Sec.

941, Nov. 28, 1990, 104 Stat. 4405; amended Pub. L. 102-27, title

III, Sec. 312(a), Apr. 10, 1991, 105 Stat. 154; Pub. L. 103-325,

title III, Sec. 345, Sept. 23, 1994, 108 Stat. 2239; Pub. L.

104-208, div. A, title II, Sec. 2103(a), Sept. 30, 1996, 110 Stat.

3009-399.)

-MISC1-

PRIOR PROVISIONS

A prior section 2605, Pub. L. 93-533, Sec. 6, Dec. 22, 1974, 88

Stat. 1726, related to advanced itemized disclosure of settlement

costs by the lender and liability of the lender for failure to

comply, prior to repeal by Pub. L. 94-205, Sec. 5, Jan. 2, 1976, 89

Stat. 1158.

AMENDMENTS

1996 - Subsec. (a). Pub. L. 104-208 amended heading and text of

subsec. (a) generally. Prior to amendment, text consisted of pars.

(1) to (3) relating to requirements for lenders of federally

related mortgage loans to disclose to applicants whether servicing

of such loan may be assigned, sold, or transferred, directed

Secretary to develop model disclosure statement, and required

signature of applicant on all such disclosure statements.

1994 - Subsec. (a)(1)(B). Pub. L. 103-325 substituted ''(B) at

the choice of the person making a federally related mortgage loan -

''(i) for each of the most recent''

for ''(B) for each of the most recent'', redesignated cls. (i) and

(ii) as subcls. (I) and (II), respectively, and realigned margins,

substituted ''or'' for ''and'' at end of subcl. (II), and added cl.

(ii).

1991 - Subsec. (j). Pub. L. 102-27 added subsec. (j).

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2609, 2610, 2614, 4901 of

this title; title 15 section 1641.

-CITE-

12 USC Sec. 2606 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2606. Exempted transactions

-STATUTE-

(a) In general

This chapter does not apply to credit transactions involving

extensions of credit -

(1) primarily for business, commercial, or agricultural

purposes; or

(2) to government or governmental agencies or

instrumentalities.

(b) Interpretation

In prescribing regulations under section 2617(a) of this title,

the Secretary shall ensure that, with respect to subsection (a) of

this section, the exemption for credit transactions involving

extensions of credit primarily for business, commercial, or

agricultural purposes, as provided in subsection (a)(1) (FOOTNOTE

1) of this section shall be the same as the exemption for such

credit transactions under section 1603(1) of title 15.

(FOOTNOTE 1) See References in Text note below.

-SOURCE-

(Pub. L. 93-533, Sec. 7, as added Pub. L. 103-325, title III, Sec.

312, Sept. 23, 1994, 108 Stat. 2221; amended Pub. L. 104-208, div.

A, title II, Sec. 2103(b), Sept. 30, 1996, 110 Stat. 3009-399.)

-REFTEXT-

REFERENCES IN TEXT

Subsection (a)(1) of this section, referred to in subsec. (b),

was in the original ''section 7(1) of the Real Estate Settlement

Procedures Act of 1974'', and was translated as referring to

section 7(a)(1) of that Act to reflect the probable intent of

Congress.

-MISC2-

PRIOR PROVISIONS

A prior section 2606, Pub. L. 93-533, Sec. 7, Dec. 22, 1974, 88

Stat. 1727, related to seller or his agent confirming that

information concerning an existing residence was disclosed to buyer

in writing before a commitment for a mortgage loan was made, prior

to repeal by Pub. L. 94-205, Sec. 6, Jan. 2, 1976, 89 Stat. 1158.

AMENDMENTS

1996 - Pub. L. 104-208 designated existing provisions as subsec.

(a), inserted heading, and added subsec. (b).

-CITE-

12 USC Sec. 2607 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2607. Prohibition against kickbacks and unearned fees

-STATUTE-

(a) Business referrals

No person shall give and no person shall accept any fee,

kickback, or thing of value pursuant to any agreement or

understanding, oral or otherwise, that business incident to or a

part of a real estate settlement service involving a federally

related mortgage loan shall be referred to any person.

(b) Splitting charges

No person shall give and no person shall accept any portion,

split, or percentage of any charge made or received for the

rendering of a real estate settlement service in connection with a

transaction involving a federally related mortgage loan other than

for services actually performed.

(c) Fees, salaries, compensation, or other payments

Nothing in this section shall be construed as prohibiting (1) the

payment of a fee (A) to attorneys at law for services actually

rendered or (B) by a title company to its duly appointed agent for

services actually performed in the issuance of a policy of title

insurance or (C) by a lender to its duly appointed agent for

services actually performed in the making of a loan, (2) the

payment to any person of a bona fide salary or compensation or

other payment for goods or facilities actually furnished or for

services actually performed, (3) payments pursuant to cooperative

brokerage and referral arrangements or agreements between real

estate agents and brokers, (4) affiliated business arrangements so

long as (A) a disclosure is made of the existence of such an

arrangement to the person being referred and, in connection with

such referral, such person is provided a written estimate of the

charge or range of charges generally made by the provider to which

the person is referred (i) in the case of a face-to-face referral

or a referral made in writing or by electronic media, at or before

the time of the referral (and compliance with this requirement in

such case may be evidenced by a notation in a written, electronic,

or similar system of records maintained in the regular course of

business); (ii) in the case of a referral made by telephone, within

3 business days after the referral by telephone, (FOOTNOTE 1) (and

in such case an abbreviated verbal disclosure of the existence of

the arrangement and the fact that a written disclosure will be

provided within 3 business days shall be made to the person being

referred during the telephone referral); or (iii) in the case of a

referral by a lender (including a referral by a lender to an

affiliated lender), at the time the estimates required under

section 2604(c) of this title are provided (notwithstanding clause

(i) or (ii)); and any required written receipt of such disclosure

(without regard to the manner of the disclosure under clause (i),

(ii), or (iii)) may be obtained at the closing or settlement

(except that a person making a face-to-face referral who provides

the written disclosure at or before the time of the referral shall

attempt to obtain any required written receipt of such disclosure

at such time and if the person being referred chooses not to

acknowledge the receipt of the disclosure at that time, that fact

shall be noted in the written, electronic, or similar system of

records maintained in the regular course of business by the person

making the referral), (B) such person is not required to use any

particular provider of settlement services, and (C) the only thing

of value that is received from the arrangement, other than the

payments permitted under this subsection, is a return on the

ownership interest or franchise relationship, or (5) such other

payments or classes of payments or other transfers as are specified

in regulations prescribed by the Secretary, after consultation with

the Attorney General, the Secretary of Veterans Affairs, the

Federal Home Loan Bank Board, the Federal Deposit Insurance

Corporation, the Board of Governors of the Federal Reserve System,

and the Secretary of Agriculture. For purposes of the preceding

sentence, the following shall not be considered a violation of

clause (4)(B): (i) any arrangement that requires a buyer, borrower,

or seller to pay for the services of an attorney, credit reporting

agency, or real estate appraiser chosen by the lender to represent

the lender's interest in a real estate transaction, or (ii) any

arrangement where an attorney or law firm represents a client in a

real estate transaction and issues or arranges for the issuance of

a policy of title insurance in the transaction directly as agent or

through a separate corporate title insurance agency that may be

established by that attorney or law firm and operated as an adjunct

to his or its law practice.

(FOOTNOTE 1) So in original.

(d) Penalties for violations; joint and several liability; treble

damages; actions for injunction by Secretary and by State

officials; costs and attorney fees; construction of State laws

(1) Any person or persons who violate the provisions of this

section shall be fined not more than $10,000 or imprisoned for not

more than one year, or both.

(2) Any person or persons who violate the prohibitions or

limitations of this section shall be jointly and severally liable

to the person or persons charged for the settlement service

involved in the violation in an amount equal to three times the

amount of any charge paid for such settlement service.

(3) No person or persons shall be liable for a violation of the

provisions of subsection (c)(4)(A) of this section if such person

or persons proves by a preponderance of the evidence that such

violation was not intentional and resulted from a bona fide error

notwithstanding maintenance of procedures that are reasonably

adapted to avoid such error.

(4) The Secretary, the Attorney General of any State, or the

insurance commissioner of any State may bring an action to enjoin

violations of this section.

(5) In any private action brought pursuant to this subsection,

the court may award to the prevailing party the court costs of the

action together with reasonable attorneys fees.

(6) No provision of State law or regulation that imposes more

stringent limitations on affiliated business arrangements shall be

construed as being inconsistent with this section.

-SOURCE-

(Pub. L. 93-533, Sec. 8, Dec. 22, 1974, 88 Stat. 1727; Pub. L.

94-205, Sec. 7, Jan. 2, 1976, 89 Stat. 1158; Pub. L. 98-181, title

IV, Sec. 461(b), (c), Nov. 30, 1983, 97 Stat. 1231; Pub. L.

100-242, title V, Sec. 570(g), Feb. 5, 1988, 101 Stat. 1950; Pub.

L. 102-54, Sec. 13(d)(4), June 13, 1991, 105 Stat. 275; Pub. L.

104-208, div. A, title II, Sec. 2103(c)(2), (d), Sept. 30, 1996,

110 Stat. 3009-400.)

-MISC1-

AMENDMENTS

1996 - Subsec. (c)(4). Pub. L. 104-208, Sec. 2103(c)(2),

substituted ''affiliated business arrangements'' for ''controlled

business arrangements''.

Subsec. (c)(4)(A). Pub. L. 104-208, Sec. 2103(d), amended subcl.

(A) generally. Prior to amendment, subcl. (A) read as follows:

''at or prior to the time of the referral a disclosure is made of

the existence of such an arrangement to the person being referred

and, in connection with the referral, such person is provided a

written estimate of the charge or range of charges generally made

by the provider to which the person is referred, except that where

a lender makes the referral, this requirement may be satisfied as

part of and at the time that the estimates of settlement charges

required under section 2604(c) of this title are provided,''.

Subsec. (d)(6). Pub. L. 104-208, Sec. 2103(c)(2), substituted

''affiliated business arrangements'' for ''controlled business

arrangements''.

1991 - Subsec. (c)(5). Pub. L. 102-54 substituted ''Secretary of

Veterans Affairs'' for ''Administrator of Veterans' Affairs''.

1988 - Subsec. (c)(5). Pub. L. 100-242 substituted ''clause

(4)(B)'' for ''clause 4(B)''.

1983 - Subsec. (c). Pub. L. 98-181, Sec. 461(b), redesignated cl.

(4) as (5), added cl. (4) and provisions following cl. (5), as so

redesignated, relating to arrangements which shall not be

considered a violation of cl. (4)(B).

Subsec. (d)(2). Pub. L. 98-181, Sec. 461(c), substituted

provisions setting forth the liability of persons violating the

prohibitions or limitations of this section for provisions setting

forth liability, in addition to penalties provided in par. (1), of

persons violating subsecs. (a) and (b) of this section, plus costs

and attorney's fees.

Subsec. (d)(3) to (6). Pub. L. 98-181, Sec. 461(c), added pars.

(3) to (6).

1976 - Subsec. (c). Pub. L. 94-205 added cls. (3) and (4).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 98-181 effective Jan. 1, 1984, see section

461(f) of Pub. L. 98-181, set out as a note under section 2602 of

this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-205 effective Jan. 2, 1976, see section

12 of Pub. L. 94-205, set out as a note under section 2602 of this

title.

-TRANS-

TRANSFER OF FUNCTIONS

Federal Home Loan Bank Board abolished and functions transferred,

see sections 401 to 406 of Pub. L. 101-73, set out as a note under

section 1437 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2614 of this title.

-CITE-

12 USC Sec. 2608 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2608. Title companies; liability of seller

-STATUTE-

(a) No seller of property that will be purchased with the

assistance of a federally related mortgage loan shall require

directly or indirectly, as a condition to selling the property,

that title insurance covering the property be purchased by the

buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) of

this section shall be liable to the buyer in an amount equal to

three times all charges made for such title insurance.

-SOURCE-

(Pub. L. 93-533, Sec. 9, Dec. 22, 1974, 88 Stat. 1728.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2614 of this title.

-CITE-

12 USC Sec. 2609 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2609. Limitation on requirement of advance deposits in escrow

accounts

-STATUTE-

(a) In general

A lender, in connection with a federally related mortgage loan,

may not require the borrower or prospective borrower -

(1) to deposit in any escrow account which may be established

in connection with such loan for the purpose of assuring payment

of taxes, insurance premiums, or other charges with respect to

the property, in connection with the settlement, an aggregate sum

(for such purpose) in excess of a sum that will be sufficient to

pay such taxes, insurance premiums and other charges attributable

to the period beginning on the last date on which each such

charge would have been paid under the normal lending practice of

the lender and local custom, provided that the selection of each

such date constitutes prudent lending practice, and ending on the

due date of its first full installment payment under the

mortgage, plus one-sixth of the estimated total amount of such

taxes, insurance premiums and other charges to be paid on dates,

as provided above, during the ensuing twelve-month period; or

(2) to deposit in any such escrow account in any month

beginning with the first full installment payment under the

mortgage a sum (for the purpose of assuring payment of taxes,

insurance premiums and other charges with respect to the

property) in excess of the sum of (A) one-twelfth of the total

amount of the estimated taxes, insurance premiums and other

charges which are reasonably anticipated to be paid on dates

during the ensuing twelve months which dates are in accordance

with the normal lending practice of the lender and local custom,

provided that the selection of each such date constitutes prudent

lending practice, plus (B) such amount as is necessary to

maintain an additional balance in such escrow account not to

exceed one-sixth of the estimated total amount of such taxes,

insurance premiums and other charges to be paid on dates, as

provided above, during the ensuing twelve-month period: Provided,

however, That in the event the lender determines there will be or

is a deficiency he shall not be prohibited from requiring

additional monthly deposits in such escrow account to avoid or

eliminate such deficiency.

(b) Notification of shortage in escrow account

If the terms of any federally related mortgage loan require the

borrower to make payments to the servicer (as the term is defined

in section 2605(i) of this title) of the loan for deposit into an

escrow account for the purpose of assuring payment of taxes,

insurance premiums, and other charges with respect to the property,

the servicer shall notify the borrower not less than annually of

any shortage of funds in the escrow account.

(c) Escrow account statements

(1) Initial statement

(A) In general

Any servicer that has established an escrow account in

connection with a federally related mortgage loan shall submit

to the borrower for which the escrow account has been

established a statement clearly itemizing the estimated taxes,

insurance premiums, and other charges that are reasonably

anticipated to be paid from the escrow account during the first

12 months after the establishment of the account and the

anticipated dates of such payments.

(B) Time of submission

The statement required under subparagraph (A) shall be

submitted to the borrower at closing with respect to the

property for which the mortgage loan is made or not later than

the expiration of the 45-day period beginning on the date of

the establishment of the escrow account.

(C) Initial statement at closing

Any servicer may submit the statement required under

subparagraph (A) to the borrower at closing and may incorporate

such statement in the uniform settlement statement required

under section 2603 of this title. The Secretary shall issue

regulations prescribing any changes necessary to the uniform

settlement statement under section 2603 of this title that

specify how the statement required under subparagraph (A) of

this section shall be incorporated in the uniform settlement

statement.

(2) Annual statement

(A) In general

Any servicer that has established or continued an escrow

account in connection with a federally related mortgage loan

shall submit to the borrower for which the escrow account has

been established or continued a statement clearly itemizing,

for each period described in subparagraph (B) (during which the

servicer services the escrow account), the amount of the

borrower's current monthly payment, the portion of the monthly

payment being placed in the escrow account, the total amount

paid into the escrow account during the period, the total

amount paid out of the escrow account during the period for

taxes, insurance premiums, and other charges (as separately

identified), and the balance in the escrow account at the

conclusion of the period.

(B) Time of submission

The statement required under subparagraph (A) shall be

submitted to the borrower not less than once for each 12-month

period, the first such period beginning on the first January

1st that occurs after November 28, 1990, and shall be submitted

not more than 30 days after the conclusion of each such 1-year

period.

(d) Penalties

(1) In general

In the case of each failure to submit a statement to a borrower

as required under subsection (c) of this section, the Secretary

shall assess to the lender or escrow servicer failing to submit

the statement a civil penalty of $50 for each such failure, but

the total amount imposed on such lender or escrow servicer for

all such failures during any 12-month period referred to in

subsection (b) (FOOTNOTE 1) of this section may not exceed

$100,000.

(FOOTNOTE 1) So in original. Probably should be subsection

''(c)''.

(2) Intentional violations

If any failure to which paragraph (1) applies is due to

intentional disregard of the requirement to submit the statement,

then, with respect to such failure -

(A) the penalty imposed under paragraph (1) shall be $100;

and

(B) in the case of any penalty determined under subparagraph

(A), the $100,000 limitation under paragraph (1) shall not

apply.

-SOURCE-

(Pub. L. 93-533, Sec. 10, Dec. 22, 1974, 88 Stat. 1728; Pub. L.

94-205, Sec. 8, Jan. 2, 1976, 89 Stat. 1158; Pub. L. 101-625, title

IX, Sec. 942(a), Nov. 28, 1990, 104 Stat. 4411; Pub. L. 104-208,

div. A, title II, Sec. 2103(g)(2), Sept. 30, 1996, 110 Stat.

3009-401.)

-MISC1-

AMENDMENTS

1996 - Subsec. (c)(1)(C). Pub. L. 104-208 substituted ''The

Secretary'' for ''Not later than the expiration of the 90-day

period beginning on November 28, 1990, the Secretary'' in second

sentence.

1990 - Pub. L. 101-625 designated existing provisions as subsec.

(a), inserted heading, and added subsecs. (b) to (d).

1976 - Pub. L. 94-205 provided that in addition to amounts

required for the payment of taxes, insurance premiums, and other

charges due at settlement, the buyer could not be required at

settlement to place into an escrow account more than one-sixth of

the estimated total amount of such taxes, insurance premiums, and

other charges payable within a twelve month period beginning on the

date of settlement, but the buyer could be required to make monthly

payments into an escrow account sufficient to maintain a surplus of

one-sixth of the estimated total amount payable in the coming

twelve month period.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-205 effective Jan. 2, 1976, see section

12 of Pub. L. 94-205, set out as a note under section 2602 of this

title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2605, 2610 of this title;

title 42 section 4012a.

-CITE-

12 USC Sec. 2610 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2610. Prohibition of fees for preparation of truth-in-lending,

uniform settlement, and escrow account statements

-STATUTE-

No fee shall be imposed or charge made upon any other person (as

a part of settlement costs or otherwise) by a lender in connection

with a federally related mortgage loan made by it (or a loan for

the purchase of a mobile home), or by a servicer (as the term is

defined under section 2605(i) of this title), for or on account of

the preparation and submission by such lender or servicer of the

statement or statements required (in connection with such loan) by

sections 2603 and 2609(c) of this title or by the Truth in Lending

Act (15 U.S.C. 1601 et seq.).

-SOURCE-

(Pub. L. 93-533, Sec. 12, Dec. 22, 1974, 88 Stat. 1729; Pub. L.

101-625, title IX, Sec. 942(b), Nov. 28, 1990, 104 Stat. 4412.)

-REFTEXT-

REFERENCES IN TEXT

Truth in Lending Act, referred to in text, is title I of Pub. L.

90-321, May 29, 1968, 82 Stat. 146, as amended, which is classified

generally to subchapter I (Sec. 1601 et seq.) of chapter 41 of

Title 15, Commerce and Trade. For complete classification of this

Act to the Code, see Short Title note set out under section 1601 of

Title 15 and Tables.

-MISC2-

AMENDMENTS

1990 - Pub. L. 101-625 substituted present section catchline for

''Fee for preparation of truth-in-lending and uniform settlement

statements'', inserted after first comma ''or by a servicer (as the

term is defined under section 2605(i) of this title),'', and

substituted ''lender or servicer'' for second reference to

''lender'' and ''2609(c)'' for ''2605''.

-CITE-

12 USC Sec. 2611 to 2613 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2611 to 2613. Repealed. Pub. L. 104-208, div. A, title II,

Sec. 2103(h), Sept. 30, 1996, 110 Stat. 3009-401

-MISC1-

Section 2611, Pub. L. 93-533, Sec. 13, Dec. 22, 1974, 88 Stat.

1730, related to establishment of land parcel recordation system on

demonstration basis.

Section 2612, Pub. L. 93-533, Sec. 14, Dec. 22, 1974, 88 Stat.

1730, directed Secretary of Housing and Urban Development to report

on necessity for further legislation involving real estate

settlements.

Section 2613, Pub. L. 93-533, Sec. 15, Dec. 22, 1974, 88 Stat.

1730, directed Secretary of Housing and Urban Development to

determine, and report to Congress on, feasibility of including

statements of settlement costs in special information booklets.

-CITE-

12 USC Sec. 2614 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2614. Jurisdiction of courts; limitations

-STATUTE-

Any action pursuant to the provisions of section 2605, 2607, or

2608 of this title may be brought in the United States district

court or in any other court of competent jurisdiction, for the

district in which the property involved is located, or where the

violation is alleged to have occurred, within 3 years in the case

of a violation of section 2605 of this title and 1 year in the case

of a violation of section 2607 or 2608 of this title from the date

of the occurrence of the violation, except that actions brought by

the Secretary, the Attorney General of any State, or the insurance

commissioner of any State may be brought within 3 years from the

date of the occurrence of the violation.

-SOURCE-

(Pub. L. 93-533, Sec. 16, Dec. 22, 1974, 88 Stat. 1731; Pub. L.

98-181, title IV, Sec. 461(d), Nov. 30, 1983, 97 Stat. 1232; Pub.

L. 104-208, div. A, title II, Sec. 2103(e), Sept. 30, 1996, 110

Stat. 3009-400.)

-MISC1-

AMENDMENTS

1996 - Pub. L. 104-208 substituted ''section 2605, 2607, or 2608

of this title'' for ''section 2607 or 2608 of this title'' and

''within 3 years in the case of a violation of section 2605 of this

title and 1 year in the case of a violation of section 2607 or 2608

of this title'' for ''within one year''.

1983 - Pub. L. 98-181 amended section generally, striking out a

reference to section 2605 of this title, and inserting provision

allowing action in district where violation is alleged to have

occurred, and provision relating to time limitations in actions

brought by the Secretary, the Attorney General of any State, or the

insurance commissioner of any State.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 98-181 effective Jan. 1, 1984, see section

461(f) of Pub. L. 98-181, set out as a note under section 2602 of

this title.

-CITE-

12 USC Sec. 2615 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2615. Contracts and liens; validity

-STATUTE-

Nothing in this chapter shall affect the validity or

enforceability of any sale or contract for the sale of real

property or any loan, loan agreement, mortgage, or lien made or

arising in connection with a federally related mortgage loan.

-SOURCE-

(Pub. L. 93-533, Sec. 17, Dec. 22, 1974, 88 Stat. 1731.)

-CITE-

12 USC Sec. 2616 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2616. State laws unaffected; inconsistent Federal and State

provisions

-STATUTE-

This chapter does not annul, alter, or affect, or exempt any

person subject to the provisions of this chapter from complying

with, the laws of any State with respect to settlement practices,

except to the extent that those laws are inconsistent with any

provision of this chapter, and then only to the extent of the

inconsistency. The Secretary is authorized to determine whether

such inconsistencies exist. The Secretary may not determine that

any State law is inconsistent with any provision of this chapter if

the Secretary determines that such law gives greater protection to

the consumer. In making these determinations the Secretary shall

consult with the appropriate Federal agencies.

-SOURCE-

(Pub. L. 93-533, Sec. 18, Dec. 22, 1974, 88 Stat. 1731; Pub. L.

94-205, Sec. 9, Jan. 2, 1976, 89 Stat. 1159.)

-MISC1-

AMENDMENTS

1976 - Pub. L. 94-205 struck out ''(a)'' before ''This chapter''

and struck out subsec. (b) which provided for Federal protection

against liability for acts done or omitted in good faith in

accordance with the rules, regulations, or interpretations issued

by the Secretary. See section 2617 (b) of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-205 effective Jan. 2, 1976, see section

12 of Pub. L. 94-205, set out as a note under section 2602 of this

title.

-CITE-

12 USC Sec. 2617 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 27 - REAL ESTATE SETTLEMENT PROCEDURES

-HEAD-

Sec. 2617. Authority of Secretary

-STATUTE-

(a) Issuance of regulations; exemptions

The Secretary is authorized to prescribe such rules and

regulations, to make such interpretations, and to grant such

reasonable exemptions for classes of transactions, as may be

necessary to achieve the purposes of this chapter.

(b) Liability for acts done in good faith in conformity with rule,

regulation, or interpretation

No provision of this chapter or the laws of any State imposing

any liability shall apply to any act done or omitted in good faith

in conformity with any rule, regulation, or interpretation thereof

by the Secretary or the Attorney General, notwithstanding that

after such act or omission has occurred, such rule, regulation, or

interpretation is amended, rescinded, or determined by judicial or

other authority to be invalid for any reason.

(c) Investigations; hearings; failure to obey order; contempt

(1) The Secretary may investigate any facts, conditions,

practices, or matters that may be deemed necessary or proper to aid

in the enforcement of the provisions of this chapter, in

prescribing of rules and regulations thereunder, or in securing

information to serve as a basis for recommending further

legislation concerning real estate settlement practices. To aid in

the investigations, the Secretary is authorized to hold such

hearings, administer such oaths, and require by subpena the

attendance and testimony of such witnesses and production of such

documents as the Secretary deems advisable.

(2) Any district court of the United States within the

jurisdiction of which an inquiry is carried on may, in the case of

contumacy or refusal to obey a subpena of the Secretary issued

under this section, issue an order requiring compliance therewith;

and any failure to obey such order of the court may be punished by

such court as a contempt thereof.

(d) Delay of effectiveness of recent final regulation relating to

payments to employees

(1) In general

The amendment to part 3500 of title 24 of the Code of Federal

Regulations contained in the final regulation prescribed by the

Secretary and published in the Federal Register on June 7, 1996,

which will, as of the effective date of such amendment -

(A) eliminate the exemption for payments by an employer to

employees of such employer for referral activities which is

currently codified as section 3500.14(g)(1)(vii) of such title

24; and

(B) replace such exemption with a more limited exemption in

new clauses (vii), (viii), and (ix) of section 3500.14 of such

title 24,

shall not take effect before July 31, 1997.

(2) Continuation of prior rule

The regulation codified as section 3500.14(g)(1)(vii) of title

24 of the Code of Federal Regulations, relating to

employer-employee payments, as in effect on May 1, 1996, shall

remain in effect until the date the amendment referred to in

paragraph (1) takes effect in accordance with such paragraph.

(3) Public notice of effective date

The Secretary shall provide public notice of the date on which

the amendment referred to in paragraph (1) will take effect in

accordance with such paragraph not less than 90 days and not more

than 180 days before such effective date.

-SOURCE-

(Pub. L. 93-533, Sec. 19, as added Pub. L. 94-205, Sec. 10, Jan. 2,

1976, 89 Stat. 1159; amended Pub. L. 98-181, title IV, Sec. 461(e),

Nov. 30, 1983, 97 Stat. 1232; Pub. L. 104-208, div. A, title II,

Sec. 2103(f), Sept. 30, 1996, 110 Stat. 3009-401.)

-MISC1-

AMENDMENTS

1996 - Subsec. (d). Pub. L. 104-208 added subsec. (d).

1983 - Subsec. (c). Pub. L. 98-181 added subsec. (c).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 98-181 effective Jan. 1, 1984, see section

461(f) of Pub. L. 98-181, set out as a note under section 2602 of

this title.

EFFECTIVE DATE

Section effective Jan. 2, 1976, see section 12 of Pub. L. 94-205,

set out as an Effective Date of 1976 Amendment note under section

2602 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2606 of this title.

-CITE-