[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 607 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 607

  To amend the Truth in Lending Act to require notice of cancellation 
rights with respect to private mortgage insurance which is required by 
  a creditor as a condition for entering into a residential mortgage 
                  transaction, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 5, 1997

 Mr. Hansen (for himself, Mr. Baker, Mr. Kennedy of Massachusetts, Mr. 
 Calvert, Mr. Waxman, Ms. Rivers, Mr. Sawyer, Mr. Evans, Mr. Boucher, 
  Ms. Furse, and Mr. Frost) introduced the following bill; which was 
      referred to the Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Truth in Lending Act to require notice of cancellation 
rights with respect to private mortgage insurance which is required by 
  a creditor as a condition for entering into a residential mortgage 
                  transaction, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeowners Insurance Protection 
Act''.

SEC. 2. NOTIFICATION OF CANCELLATION RIGHTS FOR PRIVATE MORTGAGE 
              INSURANCE.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 125 the following 
new section:

``SEC. 126. NOTIFICATION OF CANCELLATION RIGHTS FOR PRIVATE MORTGAGE 
              INSURANCE.

    ``(a) Notice of Right or Lack of Right To Cancel.--If a consumer is 
required to obtain and maintain private mortgage insurance as a 
condition for entering into a residential mortgage transaction, the 
creditor shall disclose, in writing at the time the transaction is 
entered into, whether or not the private mortgage insurance may be 
canceled by the consumer at any time while the mortgage is outstanding.
    ``(b) Information Required To Be Disclosed If Insurance is 
Cancelable.--If private mortgage insurance is required for a 
residential mortgage transaction and may be canceled by the consumer at 
any time while the mortgage is outstanding, the creditor shall disclose 
in writing the following information at the time the transaction is 
entered into:
            ``(1) Identifying information.--Such information as may be 
        necessary to permit the consumer to communicate with the 
        creditor and any subsequent servicer of the mortgage.
            ``(2) Conditions on cancellation.--Any condition required 
        to be met before the private mortgage insurance may be canceled 
        by the consumer, including the following:
                    ``(A) If a condition for canceling the private 
                mortgage insurance is based on a minimum ratio between 
                the principal on the loan remaining outstanding and 
                either the original or the current value of the 
                property securing the loan, such ratio.
                    ``(B) Information relating to any requirement for 
                an appraisal of the property as a condition for the 
                cancellation of the insurance.
                    ``(C) Information relating to the time required for 
                canceling the insurance.
            ``(3) Cancellation procedures.--The procedures required to 
        be followed by the consumer in canceling the private mortgage 
        insurance.
    ``(c) Information Required To Be Disclosed With Each Periodic 
Statement.--If a consumer is required to obtain and maintain private 
mortgage insurance as a condition for entering into a residential 
mortgage transaction, the person servicing the mortgage shall include 
in or with each written statement of account provided to the consumer 
after December 31, 1997, while such insurance is in effect, but not 
less than annually--
            ``(1) the information required to be disclosed under 
        subsection (b); or
            ``(2) a clear and conspicuous written statement 
        containing--
                    ``(A) a statement that the consumer may be able to 
                cancel the private mortgage insurance (if such is the 
                case); and
                    ``(B) an address and telephone number which the 
                consumer may use to contact the creditor or the person 
                servicing the mortgage to determine whether the 
                consumer has the right to cancel the private mortgage 
                insurance and, if so, the conditions and procedures for 
                canceling such insurance.
    ``(d) Notice Requirement.--If a consumer maintains private mortgage 
insurance in connection with a residential mortgage transaction the 
original principal of which exceeded 80 percent of the appraised value 
of the residence (as of the date of the transaction), the person 
servicing the mortgage shall send a letter to the consumer containing 
the information required to be disclosed under paragraphs (2) and (3) 
of subsection (b) and subsection (c)(2) when the principal outstanding 
on the mortgage first becomes equal to or less than the amount which is 
80 percent of the appraised value of the residence (as of the date of 
the transaction).
    ``(e) Notices Furnished Without Cost to the Consumer.--No fee or 
other cost may be imposed on any consumer with respect to the provision 
of any notice or information to the consumer pursuant to this section.
    ``(f) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Mortgage insurance.--The term `mortgage insurance' 
        means insurance, including any mortgage guaranty insurance, 
        against the nonpayment of, or default on, a mortgage or loan 
        involved in a residential mortgage transaction.
            ``(2) Private mortgage insurance.--The term `private 
        mortgage insurance' means mortgage insurance other than 
        mortgage insurance made available under the National Housing 
        Act, title 38 of the United States Code, or title V of the 
        National Housing Act of 1949.''.
    (b) Amendment Relating to Liability for Violations.--Section 130(a) 
of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended by adding at 
the end the following new sentence: ``In the case of any failure make 
any disclosure required under section 126, paragraph (1) shall be 
applied by substituting `3 times the amount of any actual damage' for 
`any actual damage'.
    (c) Scope of Applicability.--The amendments made by subsections (a) 
and (b) shall apply with respect to residential mortgage transactions 
entered into after the date of the enactment of this Act.
    (d) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by striking 
the item relating to section 126 and inserting the following new item:

``126. Notification of cancellation rights for private mortgage 
                            insurance.''.
                                 <all>