-CITE-

12 USC CHAPTER 49 - HOMEOWNERS PROTECTION 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

.

-HEAD-

CHAPTER 49 - HOMEOWNERS PROTECTION

-MISC1-

Sec.

4901. Definitions.

4902. Termination of private mortgage insurance.

(a) Borrower cancellation.

(b) Automatic termination.

(c) Final termination.

(d) Treatment of loan modifications.

(e) No further payments.

(f) Return of unearned premiums.

(g) Exceptions for high risk loans.

(h) Accrued obligation for premium payments.

4903. Disclosure requirements.

(a) Disclosures for new mortgages at time of

transaction.

(b) Disclosures for existing mortgages.

(c) Inclusion in other annual notices.

(d) Standardized forms.

4904. Notification upon cancellation or termination.

(a) In general.

(b) Notice of grounds.

4905. Disclosure requirements for lender paid mortgage insurance.

(a) Definitions.

(b) Exclusion.

(c) Notices to mortgagor.

(d) Standard forms.

4906. Fees for disclosures.

4907. Civil liability.

(a) In general.

(b) Timing of actions.

(c) Limitations on liability.

4908. Effect on other laws and agreements.

(a) Effect on State law.

(b) Effect on other agreements.

4909. Enforcement.

(a) In general.

(b) Additional enforcement powers.

(c) Enforcement and reimbursement.

4910. Construction.

(a) PMI not required.

(b) No preclusion of cancellation or termination

agreements.

-CITE-

12 USC Sec. 4901 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4901. Definitions

-STATUTE-

In this chapter, the following definitions shall apply:

(1) Adjustable rate mortgage

The term ''adjustable rate mortgage'' means a residential

mortgage that has an interest rate that is subject to change. A

residential mortgage that: (A) does not fully amortize over the

term of the obligation; and (B) contains a conditional right to

refinance or modify the unamortized principal at the maturity

date of the term, shall be considered to be an adjustable rate

mortgage for purposes of this chapter.

(2) Cancellation date

The term ''cancellation date'' means -

(A) with respect to a fixed rate mortgage, at the option of

the mortgagor, the date on which the principal balance of the

mortgage -

(i) based solely on the initial amortization schedule for

that mortgage, and irrespective of the outstanding balance

for that mortgage on that date, is first scheduled to reach

80 percent of the original value of the property securing the

loan; or

(ii) based solely on actual payments, reaches 80 percent of

the original value of the property securing the loan; and

(B) with respect to an adjustable rate mortgage, at the

option of the mortgagor, the date on which the principal

balance of the mortgage -

(i) based solely on the amortization schedule then in

effect for that mortgage, and irrespective of the outstanding

balance for that mortgage on that date, is first scheduled to

reach 80 percent of the original value of the property

securing the loan; or

(ii) based solely on actual payments, first reaches 80

percent of the original value of the property securing the

loan.

(3) Fixed rate mortgage

The term ''fixed rate mortgage'' means a residential mortgage

that has an interest rate that is not subject to change.

(4) Good payment history

The term ''good payment history'' means, with respect to a

mortgagor, that the mortgagor has not -

(A) made a mortgage payment that was 60 days or longer past

due during the 12-month period beginning 24 months before the

later of (i) the date on which the mortgage reaches the

cancellation date, or (ii) the date that the mortgagor submits

a request for cancellation under section 4902(a)(1) of this

title; or

(B) made a mortgage payment that was 30 days or longer past

due during the 12-month period preceding the later of (i) the

date on which the mortgage reaches the cancellation date, or

(ii) the date that the mortgagor submits a request for

cancellation under section 4902(a)(1) of this title.

(5) Initial amortization schedule

The term ''initial amortization schedule'' means a schedule

established at the time at which a residential mortgage

transaction is consummated with respect to a fixed rate mortgage,

showing -

(A) the amount of principal and interest that is due at

regular intervals to retire the principal balance and accrued

interest over the amortization period of the loan; and

(B) the unpaid principal balance of the loan after each

scheduled payment is made.

(6) Amortization schedule then in effect

The term ''amortization schedule then in effect'' means, with

respect to an adjustable rate mortgage, a schedule established at

the time at which the residential mortgage transaction is

consummated or, if such schedule has been changed or

recalculated, is the most recent schedule under the terms of the

note or mortgage, which shows -

(A) the amount of principal and interest that is due at

regular intervals to retire the principal balance and accrued

interest over the remaining amortization period of the loan;

and

(B) the unpaid balance of the loan after each such scheduled

payment is made.

(7) Midpoint of the amortization period

The term ''midpoint of the amortization period'' means, with

respect to a residential mortgage transaction, the point in time

that is halfway through the period that begins upon the first day

of the amortization period established at the time a residential

mortgage transaction is consummated and ends upon the completion

of the entire period over which the mortgage is scheduled to be

amortized.

(8) Mortgage insurance

The term ''mortgage insurance'' means insurance, including any

mortgage guaranty insurance, against the nonpayment of, or

default on, an individual mortgage or loan involved in a

residential mortgage transaction.

(9) Mortgage insurer

The term ''mortgage insurer'' means a provider of private

mortgage insurance, as described in this chapter, that is

authorized to transact such business in the State in which the

provider is transacting such business.

(10) Mortgagee

The term ''mortgagee'' means the holder of a residential

mortgage at the time at which that mortgage transaction is

consummated.

(11) Mortgagor

The term ''mortgagor'' means the original borrower under a

residential mortgage or his or her successors or assignees.

(12) Original value

The term ''original value'', with respect to a residential

mortgage transaction, means the lesser of the sales price of the

property securing the mortgage, as reflected in the contract, or

the appraised value at the time at which the subject residential

mortgage transaction was consummated. In the case of a

residential mortgage transaction for refinancing the principal

residence of the mortgagor, such term means only the appraised

value relied upon by the mortgagee to approve the refinance

transaction.

(13) Private mortgage insurance

The term ''private mortgage insurance'' means mortgage

insurance other than mortgage insurance made available under the

National Housing Act (12 U.S.C. 1701 et seq.), title 38, or title

V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.).

(14) Residential mortgage

The term ''residential mortgage'' means a mortgage, loan, or

other evidence of a security interest created with respect to a

single-family dwelling that is the principal residence of the

mortgagor.

(15) Residential mortgage transaction

The term ''residential mortgage transaction'' means a

transaction consummated on or after the date that is 1 year after

July 29, 1998, in which a mortgage, deed of trust, purchase money

security interest arising under an installment sales contract, or

equivalent consensual security interest is created or retained

against a single-family dwelling that is the principal residence

of the mortgagor to finance the acquisition, initial

construction, or refinancing of that dwelling.

(16) Servicer

The term ''servicer'' has the same meaning as in section

2605(i)(2) of this title, with respect to a residential mortgage.

(17) Single-family dwelling

The term ''single-family dwelling'' means a residence

consisting of 1 family dwelling unit.

(18) Termination date

The term ''termination date'' means -

(A) with respect to a fixed rate mortgage, the date on which

the principal balance of the mortgage, based solely on the

initial amortization schedule for that mortgage, and

irrespective of the outstanding balance for that mortgage on

that date, is first scheduled to reach 78 percent of the

original value of the property securing the loan; and

(B) with respect to an adjustable rate mortgage, the date on

which the principal balance of the mortgage, based solely on

the amortization schedule then in effect for that mortgage, and

irrespective of the outstanding balance for that mortgage on

that date, is first scheduled to reach 78 percent of the

original value of the property securing the loan.

-SOURCE-

(Pub. L. 105-216, Sec. 2, July 29, 1998, 112 Stat. 897; Pub. L.

106-569, title IV, Sec. 402(a)(1), (b), 405(a), 406(b)-(d), Dec.

27, 2000, 114 Stat. 2956, 2958, 2959.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in text, was in the original ''this

Act'', meaning Pub. L. 105-216, July 29, 1998, 112 Stat. 897, known

as the Homeowners Protection Act of 1998. For complete

classification of this Act to the Code, see Short Title note below

and Tables.

The National Housing Act, referred to in par. (13), is act June

27, 1934, ch. 847, 48 Stat. 1246, as amended, which is classified

principally to chapter 13 (Sec. 1701 et seq.) of this title. For

complete classification of this Act to the Code, see section 1701

of this title and Tables.

The Housing Act of 1949, referred to in par. (13), is act July

15, 1949, ch. 338, 63 Stat. 413, as amended. Title V of the Act is

classified generally to subchapter III (Sec. 1471 et seq.) of

chapter 8A of Title 42, The Public Health and Welfare. For complete

classification of this Act to the Code, see Short Title note set

out under section 1441 of Title 42 and Tables.

-MISC2-

AMENDMENTS

2000 - Par. (1). Pub. L. 106-569, Sec. 402(b), inserted at end

''A residential mortgage that: (A) does not fully amortize over the

term of the obligation; and (B) contains a conditional right to

refinance or modify the unamortized principal at the maturity date

of the term, shall be considered to be an adjustable rate mortgage

for purposes of this chapter.''

Par. (2)(B)(i). Pub. L. 106-569, Sec. 402(a)(1)(A), substituted

''the amortization schedule then in effect'' for ''amortization

schedules''.

Par. (4)(A). Pub. L. 106-569, Sec. 405(a)(1), inserted ''the

later of (i)'' before ''the date on which the mortgage'' and '', or

(ii) the date that the mortgagor submits a request for cancellation

under section 4902(a)(1) of this title'' before the semicolon.

Par. (4)(B). Pub. L. 106-569, Sec. 405(a)(2), inserted ''the

later of (i)'' before ''the date on which the mortgage'' and '', or

(ii) the date that the mortgagor submits a request for cancellation

under section 4902(a)(1) of this title'' before period at end.

Par. (6). Pub. L. 106-569, Sec. 402(a)(1)(D), added par. (6).

Former par. (6) redesignated (8).

Par. (7). Pub. L. 106-569, Sec. 406(b), added par. (7). Former

par. (7) redesignated (9).

Pars. (8) to (11). Pub. L. 106-569, Sec. 402(a)(1)(C),

redesignated pars. (6) to (9) as (8) to (11), respectively. Former

pars. (10) and (11) redesignated (12) and (13), respectively.

Par. (12). Pub. L. 106-569, Sec. 406(c), inserted ''transaction''

after ''a residential mortgage'' and inserted at end ''In the case

of a residential mortgage transaction for refinancing the principal

residence of the mortgagor, such term means only the appraised

value relied upon by the mortgagee to approve the refinance

transaction.''

Pub. L. 106-569, Sec. 402(a)(1)(C), redesignated par. (10) as

(12). Former par. (12) redesignated (14).

Par. (13). Pub. L. 106-569, Sec. 402(a)(1)(C), redesignated par.

(11) as (13). Former par. (13) redesignated (15).

Par. (14). Pub. L. 106-569, Sec. 406(d)(1), substituted

''principal residence of the mortgagor'' for ''primary residence of

the mortgagor''.

Pub. L. 106-569, Sec. 402(a)(1)(C), redesignated par. (12) as

(14). Former par. (14) redesignated (16).

Par. (15). Pub. L. 106-569, Sec. 406(d)(2), substituted

''principal residence of the mortgagor'' for ''primary residence of

the mortgagor''.

Pub. L. 106-569, Sec. 402(a)(1)(C), redesignated par. (13) as

(15). Former par. (15) redesignated (17).

Par. (16). Pub. L. 106-569, Sec. 402(a)(1)(C), redesignated par.

(14) as (16). Former par. (16) redesignated (18).

Par. (16)(B). Pub. L. 106-569, Sec. 402(a)(1)(B), substituted

''the amortization schedule then in effect'' for ''amortization

schedules''.

Pars. (17), (18). Pub. L. 106-569, Sec. 402(a)(1)(C),

redesignated pars. (15) and (16) as (17) and (18), respectively.

EFFECTIVE DATE

Pub. L. 105-216, Sec. 13, July 29, 1998, 112 Stat. 908, provided

that: ''This Act (enacting this chapter and amending section 1088

of Title 20, Education), other than section 14 (enacting provisions

set out as notes under sections 1441a and 1831q of this title and

amending provisions set out as a note under section 1831q of this

title), shall become effective 1 year after the date of enactment

of this Act (July 29, 1998).''

SHORT TITLE OF 2000 AMENDMENT

Pub. L. 106-569, title IV, Sec. 401, Dec. 27, 2000, 114 Stat.

2956, provided that: ''This title (amending this section and

sections 4902, 4903, and 4905 of this title) may be cited as the

'Private Mortgage Insurance Technical Corrections and Clarification

Act'.''

SHORT TITLE

Pub. L. 105-216, Sec. 1(a), July 29, 1998, 112 Stat. 897,

provided that: ''This Act (enacting this chapter, amending section

1088 of Title 20, Education, enacting provisions set out as notes

under sections 1441a and 1831q of this title, and amending

provisions set out as a note under section 1831q of this title) may

be cited as the 'Homeowners Protection Act of 1998'.''

-CITE-

12 USC Sec. 4902 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4902. Termination of private mortgage insurance

-STATUTE-

(a) Borrower cancellation

A requirement for private mortgage insurance in connection with a

residential mortgage transaction shall be canceled on the

cancellation date or any later date that the mortgagor fulfills all

of the requirements under paragraphs (1) through (4), if the

mortgagor -

(1) submits a request in writing to the servicer that

cancellation be initiated;

(2) has a good payment history with respect to the residential

mortgage;

(3) is current on the payments required by the terms of the

residential mortgage transaction; and

(4) has satisfied any requirement of the holder of the mortgage

(as of the date of a request under paragraph (1)) for -

(A) evidence (of a type established in advance and made known

to the mortgagor by the servicer promptly upon receipt of a

request under paragraph (1)) that the value of the property

securing the mortgage has not declined below the original value

of the property; and

(B) certification that the equity of the mortgagor in the

residence securing the mortgage is unencumbered by a

subordinate lien.

(b) Automatic termination

A requirement for private mortgage insurance in connection with a

residential mortgage transaction shall terminate with respect to

payments for that mortgage insurance made by the mortgagor -

(1) on the termination date if, on that date, the mortgagor is

current on the payments required by the terms of the residential

mortgage transaction; or

(2) if the mortgagor is not current on the termination date, on

the first day of the first month beginning after the date that

the mortgagor becomes current on the payments required by the

terms of the residential mortgage transaction.

(c) Final termination

If a requirement for private mortgage insurance is not otherwise

canceled or terminated in accordance with subsection (a) or (b) of

this section, in no case may such a requirement be imposed on

residential mortgage transactions beyond the first day of the month

immediately following the date that is the midpoint of the

amortization period of the loan if the mortgagor is current on the

payments required by the terms of the mortgage.

(d) Treatment of loan modifications

If a mortgagor and mortgagee (or holder of the mortgage) agree to

a modification of the terms or conditions of a loan pursuant to a

residential mortgage transaction, the cancellation date,

termination date, or final termination shall be recalculated to

reflect the modified terms and conditions of such loan.

(e) No further payments

No payments or premiums may be required from the mortgagor in

connection with a private mortgage insurance requirement terminated

or canceled under this section -

(1) in the case of cancellation under subsection (a) of this

section, more than 30 days after the later of -

(A) the date on which a request under subsection (a)(1) of

this section is received; or

(B) the date on which the mortgagor satisfies any evidence

and certification requirements under subsection (a)(4) of this

section;

(2) in the case of termination under subsection (b) of this

section, more than 30 days after the termination date or the date

referred to in subsection (b)(2) of this section, as applicable;

and

(3) in the case of termination under subsection (c) of this

section, more than 30 days after the final termination date

established under that subsection.

(f) Return of unearned premiums

(1) In general

Not later than 45 days after the termination or cancellation of

a private mortgage insurance requirement under this section, all

unearned premiums for private mortgage insurance shall be

returned to the mortgagor by the servicer.

(2) Transfer of funds to servicer

Not later than 30 days after notification by the servicer of

termination or cancellation of private mortgage insurance under

this chapter with respect to a mortgagor, a mortgage insurer that

is in possession of any unearned premiums of that mortgagor shall

transfer to the servicer of the subject mortgage an amount equal

to the amount of the unearned premiums for repayment in

accordance with paragraph (1).

(g) Exceptions for high risk loans

(1) In general

The termination and cancellation provisions in subsections (a)

and (b) of this section do not apply to any residential mortgage

transaction that, at the time at which the residential mortgage

transaction is consummated, has high risks associated with the

extension of the loan -

(A) as determined in accordance with guidelines published by

the Federal National Mortgage Association and the Federal Home

Loan Mortgage Corporation, in the case of a mortgage loan with

an original principal balance that does not exceed the

applicable annual conforming loan limit for the secondary

market established pursuant to section 1454(a)(2) of this

title, so as to require the imposition or continuation of a

private mortgage insurance requirement beyond the terms

specified in subsection (a) or (b) of this section; or

(B) as determined by the mortgagee in the case of any other

mortgage, except that termination shall occur -

(i) with respect to a fixed rate mortgage, on the date on

which the principal balance of the mortgage, based solely on

the initial amortization schedule for that mortgage, and

irrespective of the outstanding balance for that mortgage on

that date, is first scheduled to reach 77 percent of the

original value of the property securing the loan; and

(ii) with respect to an adjustable rate mortgage, on the

date on which the principal balance of the mortgage, based

solely on the amortization schedule then in effect for that

mortgage, and irrespective of the outstanding balance for

that mortgage on that date, is first scheduled to reach 77

percent of the original value of the property securing the

loan.

(2) Termination at midpoint

A private mortgage insurance requirement in connection with a

residential mortgage transaction described in paragraph (1) shall

terminate in accordance with subsection (c) of this section.

(3) Rule of construction

Nothing in this subsection may be construed to require a

residential mortgage or residential mortgage transaction

described in paragraph (1)(A) to be purchased by the Federal

National Mortgage Association or the Federal Home Loan Mortgage

Corporation.

(4) GAO report

Not later than 2 years after July 29, 1998, the Comptroller

General of the United States shall submit to the Congress a

report describing the volume and characteristics of residential

mortgages and residential mortgage transactions that, pursuant to

paragraph (1) of this subsection, are exempt from the application

of subsections (a) and (b) of this section. The report shall -

(A) determine the number or volume of such mortgages and

transactions compared to residential mortgages and residential

mortgage transactions that are not classified as high-risk for

purposes of paragraph (1); and

(B) identify the characteristics of such mortgages and

transactions that result in their classification (for purposes

of paragraph (1)) as having high risks associated with the

extension of the loan and describe such characteristics,

including -

(i) the income levels and races of the mortgagors involved;

(ii) the amount of the downpayments involved and the

downpayments expressed as percentages of the acquisition

costs of the properties involved;

(iii) the types and locations of the properties involved;

(iv) the mortgage principal amounts; and

(v) any other characteristics of such mortgages and

transactions that may contribute to their classification as

high risk for purposes of paragraph (1), including whether

such mortgages are purchase-money mortgages or refinancings

and whether and to what extent such loans are

low-documentation loans.

(h) Accrued obligation for premium payments

The cancellation or termination under this section of the private

mortgage insurance of a mortgagor shall not affect the rights of

any mortgagee, servicer, or mortgage insurer to enforce any

obligation of such mortgagor for premium payments accrued prior to

the date on which such cancellation or termination occurred.

-SOURCE-

(Pub. L. 105-216, Sec. 3, July 29, 1998, 112 Stat. 899; Pub. L.

106-569, title IV, Sec. 402(a)(2), (c)(1), 403(a), 404, 405(b),

(c), Dec. 27, 2000, 114 Stat. 2956-2958.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-569, Sec. 404(1)(A), inserted

''or any later date that the mortgagor fulfills all of the

requirements under paragraphs (1) through (4)'' after

''cancellation date'' in introductory provisions.

Subsec. (a)(3), (4). Pub. L. 106-569, Sec. 404(1)(B)-(D), added

par. (3) and redesignated former par. (3) as (4).

Subsec. (b)(2). Pub. L. 106-569, Sec. 405(b), amended par. (2)

generally. Prior to amendment, par. (2) read as follows: ''on the

date after the termination date on which the mortgagor becomes

current on the payments required by the terms of the residential

mortgage transaction.''

Subsec. (c). Pub. L. 106-569, Sec. 403(a)(1), inserted ''on

residential mortgage transactions'' after ''requirement be

imposed''.

Subsec. (d). Pub. L. 106-569, Sec. 402(c)(1)(B), added subsec.

(d). Former subsec. (d) redesignated (e).

Subsec. (e). Pub. L. 106-569, Sec. 402(c)(1)(A), redesignated

subsec. (d) as (e). Former subsec. (e) redesignated (f).

Subsec. (e)(1)(B). Pub. L. 106-569, Sec. 404(2), substituted

''subsection (a)(4) of this section'' for ''subsection (a)(3) of

this section''.

Subsec. (f). Pub. L. 106-569, Sec. 402(c)(1)(A), redesignated

subsec. (e) as (f). Former subsec. (f) redesignated (g).

Subsec. (f)(1)(B)(ii). Pub. L. 106-569, Sec. 402(a)(2),

substituted ''the amortization schedule then in effect'' for

''amortization schedules''.

Subsec. (g). Pub. L. 106-569, Sec. 402(c)(1)(A), redesignated

subsec. (f) as (g).

Subsec. (g)(1). Pub. L. 106-569, Sec. 403(a)(2)(A), struck out

''mortgage or'' after ''do not apply to any residential'' in

introductory provisions.

Subsec. (g)(2). Pub. L. 106-569, Sec. 403(a)(2)(B), struck out

''mortgage or'' after ''in connection with a residential''.

Subsec. (g)(3). Pub. L. 106-569, Sec. 403(a)(2)(C), substituted

''residential mortgage or residential'' for ''mortgage or''.

Subsec. (h). Pub. L. 106-569, Sec. 405(c), added subsec. (h).

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 4901, 4903, 4904, 4905 of

this title.

-CITE-

12 USC Sec. 4903 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4903. Disclosure requirements

-STATUTE-

(a) Disclosures for new mortgages at time of transaction

(1) Disclosures for non-exempted transactions

In any case in which private mortgage insurance is required in

connection with a residential mortgage transaction (other than a

residential mortgage transaction described in section 4902(g)(1)

of this title), at the time at which the transaction is

consummated, the mortgagee shall provide to the mortgagor -

(A) if the transaction relates to a fixed rate mortgage -

(i) a written initial amortization schedule; and

(ii) written notice -

(I) that the mortgagor may cancel the requirement in

accordance with section 4902(a) of this title indicating

the date on which the mortgagor may request cancellation,

based solely on the initial amortization schedule;

(II) that the mortgagor may request cancellation in

accordance with section 4902(a) of this title earlier than

provided for in the initial amortization schedule, based on

actual payments;

(III) that the requirement for private mortgage insurance

will automatically terminate on the termination date in

accordance with section 4902(b) of this title, and what

that termination date is with respect to that mortgage; and

(IV) that there are exemptions to the right to

cancellation and automatic termination of a requirement for

private mortgage insurance in accordance with section

4902(g) of this title, and whether such an exemption

applies at that time to that transaction; and

(B) if the transaction relates to an adjustable rate

mortgage, a written notice that -

(i) the mortgagor may cancel the requirement in accordance

with section 4902(a) of this title on the cancellation date,

and that the servicer will notify the mortgagor when the

cancellation date is reached;

(ii) the requirement for private mortgage insurance will

automatically terminate on the termination date, and that on

the termination date, the mortgagor will be notified of the

termination or that the requirement will be terminated as

soon as the mortgagor is current on loan payments; and

(iii) there are exemptions to the right of cancellation and

automatic termination of a requirement for private mortgage

insurance in accordance with section 4902(g) of this title,

and whether such an exemption applies at that time to that

transaction.

(2) Disclosures for excepted transactions

In the case of a residential mortgage transaction described in

section 4902(g)(1) of this title, at the time at which the

transaction is consummated, the mortgagee shall provide written

notice to the mortgagor that in no case may private mortgage

insurance be required beyond the date that is the midpoint of the

amortization period of the loan, if the mortgagor is current on

payments required by the terms of the residential mortgage.

(3) Annual disclosures

If private mortgage insurance is required in connection with a

residential mortgage transaction, the servicer shall disclose to

the mortgagor in each such transaction in an annual written

statement -

(A) the rights of the mortgagor under this chapter to

cancellation or termination of the private mortgage insurance

requirement; and

(B) an address and telephone number that the mortgagor may

use to contact the servicer to determine whether the mortgagor

may cancel the private mortgage insurance.

(4) Applicability

Paragraphs (1) through (3) shall apply with respect to each

residential mortgage transaction consummated on or after the date

that is 1 year after July 29, 1998.

(b) Disclosures for existing mortgages

If private mortgage insurance was required in connection with a

residential mortgage entered into at any time before the effective

date of this chapter, the servicer shall disclose to the mortgagor

in each such transaction in an annual written statement -

(1) that the private mortgage insurance may, under certain

circumstances, be canceled by the mortgagor (with the consent of

the mortgagee or in accordance with applicable State law); and

(2) an address and telephone number that the mortgagor may use

to contact the servicer to determine whether the mortgagor may

cancel the private mortgage insurance.

(c) Inclusion in other annual notices

The information and disclosures required under subsection (b) of

this section and subsection (a)(3) of this section may be provided

on the annual disclosure relating to the escrow account made as

required under the Real Estate Settlement Procedures Act of 1974

(12 U.S.C. 2601 et seq.), or as part of the annual disclosure of

interest payments made pursuant to Internal Revenue Service

regulations, and on a form promulgated by the Internal Revenue

Service for that purpose.

(d) Standardized forms

The mortgagee or servicer may use standardized forms for the

provision of disclosures required under this section, which

disclosures shall relate to the mortgagor's rights under this

chapter.

-SOURCE-

(Pub. L. 105-216, Sec. 4, July 29, 1998, 112 Stat. 902; Pub. L.

106-569, title IV, Sec. 402(c)(2), 403(b), Dec. 27, 2000, 114 Stat.

2957.)

-REFTEXT-

REFERENCES IN TEXT

The effective date of this chapter, referred to in subsec. (b),

is 1 year after July 29, 1998, see section 13 of Pub. L. 105-216,

set out as an Effective Date note under section 4901 of this title.

The Real Estate Settlement Procedures Act of 1974, referred to in

subsec. (c), is Pub. L. 93-533, Dec. 22, 1974, 88 Stat. 1724, as

amended, which is classified principally to chapter 27 (Sec. 2601

et seq.) of this title. For complete classification of this Act to

the Code, see Short Title note set out under section 2601 of this

title and Tables.

-MISC2-

AMENDMENTS

2000 - Subsec. (a)(1). Pub. L. 106-569, Sec. 402(c)(2)(A)(i),

403(b)(1)(A), substituted ''residential mortgage transaction (other

than a residential mortgage transaction described in section

4902(g)(1) of this title)'' for ''residential mortgage or mortgage

transaction (other than a mortgage or mortgage transaction

described in section 4902(f)(1) of this title)'' in introductory

provisions.

Subsec. (a)(1)(A)(ii)(IV), (B)(iii). Pub. L. 106-569, Sec.

402(c)(2)(A)(ii), (iii), substituted ''section 4902(g) of this

title'' for ''section 4902(f) of this title''.

Subsec. (a)(2). Pub. L. 106-569, Sec. 402(c)(2)(B), 403(b)(1)(B),

substituted ''residential mortgage transaction'' for ''mortgage or

mortgage transaction'' and ''section 4902(g)(1) of this title'' for

''section 4902(f)(1) of this title''.

Subsec. (c). Pub. L. 106-569, Sec. 403(b)(2), substituted

''subsection (a)(3) of this section'' for ''paragraphs (1)(B) and

(3) of subsection (a) of this section''.

Subsec. (d). Pub. L. 106-569, Sec. 403(b)(3), inserted before

period at end '', which disclosures shall relate to the mortgagor's

rights under this chapter''.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 4905 of this title.

-CITE-

12 USC Sec. 4904 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4904. Notification upon cancellation or termination

-STATUTE-

(a) In general

Not later than 30 days after the date of cancellation or

termination of a private mortgage insurance requirement in

accordance with this chapter, the servicer shall notify the

mortgagor in writing -

(1) that the private mortgage insurance has terminated and that

the mortgagor no longer has private mortgage insurance; and

(2) that no further premiums, payments, or other fees shall be

due or payable by the mortgagor in connection with the private

mortgage insurance.

(b) Notice of grounds

(1) In general

If a servicer determines that a mortgage did not meet the

requirements for termination or cancellation of private mortgage

insurance under subsection (a) or (b) of section 4902 of this

title, the servicer shall provide written notice to the mortgagor

of the grounds relied on to make the determination (including the

results of any appraisal used to make the determination).

(2) Timing

Notice required by paragraph (1) shall be provided -

(A) with respect to cancellation of private mortgage

insurance under section 4902(a) of this title, not later than

30 days after the later of -

(i) the date on which a request is received under section

4902(a)(1) of this title; or

(ii) the date on which the mortgagor satisfies any evidence

and certification requirements under section 4902(a)(3)

(FOOTNOTE 1) of this title; and

(FOOTNOTE 1) See References in Text note below.

(B) with respect to termination of private mortgage insurance

under section 4902(b) of this title, not later than 30 days

after the scheduled termination date.

-SOURCE-

(Pub. L. 105-216, Sec. 5, July 29, 1998, 112 Stat. 903.)

-REFTEXT-

REFERENCES IN TEXT

Section 4902(a)(3) of this title, referred to in subsec.

(b)(2)(A)(ii), was redesignated section 4902(a)(4) of this title by

Pub. L. 106-569, title IV, Sec. 404(1)(C), Dec. 27, 2000, 114 Stat.

2958.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 4905 of this title.

-CITE-

12 USC Sec. 4905 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4905. Disclosure requirements for lender paid mortgage

insurance

-STATUTE-

(a) Definitions

For purposes of this section -

(1) the term ''borrower paid mortgage insurance'' means private

mortgage insurance that is required in connection with a

residential mortgage transaction, payments for which are made by

the borrower;

(2) the term ''lender paid mortgage insurance'' means private

mortgage insurance that is required in connection with a

residential mortgage transaction, payments for which are made by

a person other than the borrower; and

(3) the term ''loan commitment'' means a prospective

mortgagee's written confirmation of its approval, including any

applicable closing conditions, of the application of a

prospective mortgagor for a residential mortgage loan.

(b) Exclusion

Sections 4902 through 4904 of this title do not apply in the case

of lender paid mortgage insurance.

(c) Notices to mortgagor

In the case of lender paid mortgage insurance that is required in

connection with a residential mortgage transaction -

(1) not later than the date on which a loan commitment is made

for the residential mortgage transaction, the prospective

mortgagee shall provide to the prospective mortgagor a written

notice -

(A) that lender paid mortgage insurance differs from borrower

paid mortgage insurance, in that lender paid mortgage insurance

may not be canceled by the mortgagor, while borrower paid

mortgage insurance could be cancelable by the mortgagor in

accordance with section 4902(a) of this title, and could

automatically terminate on the termination date in accordance

with section 4902(b) of this title;

(B) that lender paid mortgage insurance -

(i) usually results in a residential mortgage having a

higher interest rate than it would in the case of borrower

paid mortgage insurance; and

(ii) terminates only when the residential mortgage is

refinanced (under the meaning given such term in the

regulations issued by the Board of Governors of the Federal

Reserve System to carry out the Truth in Lending Act (15

U.S.C. 1601 et seq.)), paid off, or otherwise terminated; and

(C) that lender paid mortgage insurance and borrower paid

mortgage insurance both have benefits and disadvantages,

including a generic analysis of the differing costs and

benefits of a residential mortgage in the case lender paid

mortgage insurance versus borrower paid mortgage insurance over

a 10-year period, assuming prevailing interest and property

appreciation rates;

(D) that lender paid mortgage insurance may be tax-deductible

for purposes of Federal income taxes, if the mortgagor itemizes

expenses for that purpose; and

(2) not later than 30 days after the termination date that

would apply in the case of borrower paid mortgage insurance, the

servicer shall provide to the mortgagor a written notice

indicating that the mortgagor may wish to review financing

options that could eliminate the requirement for private mortgage

insurance in connection with the residential mortgage

transaction.

(d) Standard forms

The servicer of a residential mortgage transaction may develop

and use a standardized form or forms for the provision of notices

to the mortgagor, as required under subsection (c) of this section.

-SOURCE-

(Pub. L. 105-216, Sec. 6, July 29, 1998, 112 Stat. 904; Pub. L.

106-569, title IV, Sec. 403(c), 406(a), Dec. 27, 2000, 114 Stat.

2957, 2959.)

-REFTEXT-

REFERENCES IN TEXT

The Truth in Lending Act, referred to in subsec.(c)(1)(B)(ii), 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

2000 - Subsec. (c). Pub. L. 106-569, Sec. 403(c)(1)(A), struck

out ''a residential mortgage or'' before ''a residential mortgage

transaction'' in introductory provisions.

Subsec. (c)(1)(B)(ii). Pub. L. 106-569, Sec. 406(a), inserted

''(under the meaning given such term in the regulations issued by

the Board of Governors of the Federal Reserve System to carry out

the Truth in Lending Act (15 U.S.C. 1601 et seq.))'' after

''refinanced''.

Subsec. (c)(2). Pub. L. 106-569, Sec. 403(c)(1)(B), inserted

''transaction'' before period at end.

Subsec. (d). Pub. L. 106-569, Sec. 403(c)(2), inserted

''transaction'' after ''residential mortgage''.

-CITE-

12 USC Sec. 4906 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4906. Fees for disclosures

-STATUTE-

No fee or other cost may be imposed on any mortgagor with respect

to the provision of any notice or information to the mortgagor

pursuant to this chapter.

-SOURCE-

(Pub. L. 105-216, Sec. 7, July 29, 1998, 112 Stat. 905.)

-CITE-

12 USC Sec. 4907 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4907. Civil liability

-STATUTE-

(a) In general

Any servicer, mortgagee, or mortgage insurer that violates a

provision of this chapter shall be liable to each mortgagor to whom

the violation relates for -

(1) in the case of an action by an individual, or a class

action in which the liable party is not subject to section 4909

of this title, any actual damages sustained by the mortgagor as a

result of the violation, including interest (at a rate determined

by the court) on the amount of actual damages, accruing from the

date on which the violation commences;

(2) in the case of -

(A) an action by an individual, such statutory damages as the

court may allow, not to exceed $2,000; and

(B) in the case of a class action -

(i) in which the liable party is subject to section 4909 of

this title, such amount as the court may allow, except that

the total recovery under this subparagraph in any class

action or series of class actions arising out of the same

violation by the same liable party shall not exceed the

lesser of $500,000 or 1 percent of the net worth of the

liable party, as determined by the court; and

(ii) in which the liable party is not subject to section

4909 of this title, such amount as the court may allow, not

to exceed $1,000 as to each member of the class, except that

the total recovery under this subparagraph in any class

action or series of class actions arising out of the same

violation by the same liable party shall not exceed the

lesser of $500,000 or 1 percent of the gross revenues of the

liable party, as determined by the court;

(3) costs of the action; and

(4) reasonable attorney fees, as determined by the court.

(b) Timing of actions

No action may be brought by a mortgagor under subsection (a) of

this section later than 2 years after the date of the discovery of

the violation that is the subject of the action.

(c) Limitations on liability

(1) In general

With respect to a residential mortgage transaction, the failure

of a servicer to comply with the requirements of this chapter due

to the failure of a mortgage insurer or a mortgagee to comply

with the requirements of this chapter, shall not be construed to

be a violation of this chapter by the servicer.

(2) Rule of construction

Nothing in paragraph (1) shall be construed to impose any

additional requirement or liability on a mortgage insurer, a

mortgagee, or a holder of a residential mortgage.

-SOURCE-

(Pub. L. 105-216, Sec. 8, July 29, 1998, 112 Stat. 905.)

-CITE-

12 USC Sec. 4908 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4908. Effect on other laws and agreements

-STATUTE-

(a) Effect on State law

(1) In general

With respect to any residential mortgage or residential

mortgage transaction consummated after the effective date of this

chapter, and except as provided in paragraph (2), the provisions

of this chapter shall supersede any provisions of the law of any

State relating to requirements for obtaining or maintaining

private mortgage insurance in connection with residential

mortgage transactions, cancellation or automatic termination of

such private mortgage insurance, any disclosure of information

addressed by this chapter, and any other matter specifically

addressed by this chapter.

(2) Protection of existing State laws

(A) In general

The provisions of this chapter do not supersede protected

State laws, except to the extent that the protected State laws

are inconsistent with any provision of this chapter, and then

only to the extent of the inconsistency.

(B) Inconsistencies

A protected State law shall not be considered to be

inconsistent with a provision of this chapter if the protected

State law -

(i) requires termination of private mortgage insurance or

other mortgage guaranty insurance -

(I) at a date earlier than as provided in this chapter;

or

(II) when a mortgage principal balance is achieved that

is higher than as provided in this chapter; or

(ii) requires disclosure of information -

(I) that provides more information than the information

required by this chapter; or

(II) more often or at a date earlier than is required by

this chapter.

(C) Protected State laws

For purposes of this paragraph, the term ''protected State

law'' means a State law -

(i) regarding any requirements relating to private mortgage

insurance in connection with residential mortgage

transactions;

(ii) that was enacted not later than 2 years after July 29,

1998; and

(iii) that is the law of a State that had in effect, on or

before January 2, 1998, any State law described in clause

(i).

(b) Effect on other agreements

The provisions of this chapter shall supersede any conflicting

provision contained in any agreement relating to the servicing of a

residential mortgage loan entered into by the Federal National

Mortgage Association, the Federal Home Loan Mortgage Corporation,

or any private investor or note holder (or any successors thereto).

-SOURCE-

(Pub. L. 105-216, Sec. 9, July 29, 1998, 112 Stat. 906.)

-REFTEXT-

REFERENCES IN TEXT

The effective date of this chapter, referred to in subsec.

(a)(1), is 1 year after July 29, 1998, see section 13 of Pub. L.

105-216, set out as an Effective Date note under section 4901 of

this title.

-CITE-

12 USC Sec. 4909 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4909. Enforcement

-STATUTE-

(a) In general

Compliance with the requirements imposed under this chapter shall

be enforced under -

(1) section 8 of the Federal Deposit Insurance Act (12 U.S.C.

1818) -

(A) by the appropriate Federal banking agency (as defined in

section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.

1813(q))) in the case of insured depository institutions (as

defined in section 3(c)(2) of such Act (12 U.S.C. 1813(c)(2)));

(B) by the Federal Deposit Insurance Corporation in the case

of depository institutions described in clause (i), (ii), or

(iii) of section 19(b)(1)(A) of the Federal Reserve Act (12

U.S.C. 461(b)(1)(A)) that are not insured depository

institutions (as defined in section 3(c)(2) of the Federal

Deposit Insurance Act (12 U.S.C. 1813(c)(2))); and

(C) by the Director of the Office of Thrift Supervision in

the case of depository institutions described in clause (v) and

or (vi) of section 19(b)(1)(A) of the Federal Reserve Act (12

U.S.C. 461(b)(1)(A)) that are not insured depository

institutions (as defined in section 3(c)(2) of the Federal

Deposit Insurance Act (12 U.S.C. 1813(c)(2)));

(2) the Federal Credit Union Act (12 U.S.C. 1751 et seq.), by

the National Credit Union Administration Board in the case of

depository institutions described in clause (iv) of section

19(b)(1)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A));

and

(3) part C of title V of the Farm Credit Act of 1971 (12 U.S.C.

2261 et seq.), by the Farm Credit Administration in the case of

an institution that is a member of the Farm Credit System.

(b) Additional enforcement powers

(1) Violation of this chapter treated as violation of other Acts

For purposes of the exercise by any agency referred to in

subsection (a) of this section of such agency's powers under any

Act referred to in such subsection, a violation of a requirement

imposed under this chapter shall be deemed to be a violation of a

requirement imposed under that Act.

(2) Enforcement authority under other Acts

In addition to the powers of any agency referred to in

subsection (a) of this section under any provision of law

specifically referred to in such subsection, each such agency may

exercise, for purposes of enforcing compliance with any

requirement imposed under this chapter, any other authority

conferred on such agency by law.

(c) Enforcement and reimbursement

In carrying out its enforcement activities under this section,

each agency referred to in subsection (a) of this section shall -

(1) notify the mortgagee or servicer of any failure of the

mortgagee or servicer to comply with 1 or more provisions of this

chapter;

(2) with respect to each such failure to comply, require the

mortgagee or servicer, as applicable, to correct the account of

the mortgagor to reflect the date on which the mortgage insurance

should have been canceled or terminated under this chapter; and

(3) require the mortgagee or servicer, as applicable, to

reimburse the mortgagor in an amount equal to the total unearned

premiums paid by the mortgagor after the date on which the

obligation to pay those premiums ceased under this chapter.

-SOURCE-

(Pub. L. 105-216, Sec. 10, July 29, 1998, 112 Stat. 907.)

-REFTEXT-

REFERENCES IN TEXT

The Federal Credit Union Act, referred to in subsec. (a)(2), is

act June 26, 1934, ch. 750, 48 Stat. 1216, as amended, which is

classified generally to chapter 14 (Sec. 1751 et seq.) of this

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

section 1751 of this title and Tables.

The Farm Credit Act of 1971, referred to in subsec. (a)(3), is

Pub. L. 92-181, Dec. 10, 1971, 85 Stat. 583, as amended. Part C of

title V of the Act is classified generally to part C (Sec. 2261 et

seq.) of subchapter V of chapter 23 of this title. For complete

classification of this Act to the Code, see Short Title note set

out under section 2001 of this title and Tables.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 4907 of this title.

-CITE-

12 USC Sec. 4910 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 49 - HOMEOWNERS PROTECTION

-HEAD-

Sec. 4910. Construction

-STATUTE-

(a) PMI not required

Nothing in this chapter shall be construed to impose any

requirement for private mortgage insurance in connection with a

residential mortgage transaction.

(b) No preclusion of cancellation or termination agreements

Nothing in this chapter shall be construed to preclude

cancellation or termination, by agreement between a mortgagor and

the holder of the mortgage, of a requirement for private mortgage

insurance in connection with a residential mortgage transaction

before the cancellation or termination date established by this

chapter for the mortgage.

-SOURCE-

(Pub. L. 105-216, Sec. 11, July 29, 1998, 112 Stat. 908.)