[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 318 Enrolled Bill (ENR)]

        S.318

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 An Act


 
To require automatic cancellation and notice of cancellation rights with 
 respect to private mortgage insurance which is required as a condition 
  for entering into a residential mortgage transaction, to abolish the 
  Thrift Depositor Protection Oversight Board, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Homeowners 
Protection Act of 1998''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Termination of private mortgage insurance.
Sec. 4. Disclosure requirements.
Sec. 5. Notification upon cancellation or termination.
Sec. 6. Disclosure requirements for lender paid mortgage insurance.
Sec. 7. Fees for disclosures.
Sec. 8. Civil liability.
Sec. 9. Effect on other laws and agreements.
Sec. 10. Enforcement.
Sec. 11. Construction.
Sec. 12. Amendment to Higher Education Act of 1965.
Sec. 13. Effective date.
Sec. 14. Abolishment of the Thrift Depositor Protection Oversight Board.

SEC. 2. DEFINITIONS.

    In this Act, 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.
        (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 amortization schedules 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 
        date on which the mortgage reaches the cancellation date; or
            (B) made a mortgage payment that was 30 days or longer past 
        due during the 12-month period preceding the date on which the 
        mortgage reaches the cancellation date.
        (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) 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.
        (7) Mortgage insurer.--The term ``mortgage insurer'' means a 
    provider of private mortgage insurance, as described in this Act, 
    that is authorized to transact such business in the State in which 
    the provider is transacting such business.
        (8) Mortgagee.--The term ``mortgagee'' means the holder of a 
    residential mortgage at the time at which that mortgage transaction 
    is consummated.
        (9) Mortgagor.--The term ``mortgagor'' means the original 
    borrower under a residential mortgage or his or her successors or 
    assignees.
        (10) Original value.--The term ``original value'', with respect 
    to a residential mortgage, 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.
        (11) 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 Housing Act of 1949.
        (12) 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 
    primary residence of the mortgagor.
        (13) Residential mortgage transaction.--The term ``residential 
    mortgage transaction'' means a transaction consummated on or after 
    the date that is 1 year after the date of enactment of this Act, 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 primary residence of the 
    mortgagor to finance the acquisition, initial construction, or 
    refinancing of that dwelling.
        (14) Servicer.--The term ``servicer'' has the same meaning as 
    in section 6(i)(2) of the Real Estate Settlement Procedures Act of 
    1974, with respect to a residential mortgage.
        (15) Single-family dwelling.--The term ``single-family 
    dwelling'' means a residence consisting of 1 family dwelling unit.
        (16) 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 
        amortization schedules 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.

SEC. 3. TERMINATION OF PRIVATE MORTGAGE INSURANCE.

    (a) Borrower Cancellation.--A requirement for private mortgage 
insurance in connection with a residential mortgage transaction shall 
be canceled on the cancellation date, 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; and
        (3) 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) 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.
    (c) Final Termination.--If a requirement for private mortgage 
insurance is not otherwise canceled or terminated in accordance with 
subsection (a) or (b), in no case may such a requirement be imposed 
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) 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), more than 
    30 days after the later of--
            (A) the date on which a request under subsection (a)(1) is 
        received; or
            (B) the date on which the mortgagor satisfies any evidence 
        and certification requirements under subsection (a)(3);
        (2) in the case of termination under subsection (b), more than 
    30 days after the termination date or the date referred to in 
    subsection (b)(2), as applicable; and
        (3) in the case of termination under subsection (c), more than 
    30 days after the final termination date established under that 
    subsection.
    (e) 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 Act 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).
    (f) Exceptions for High Risk Loans.--
        (1) In general.--The termination and cancellation provisions in 
    subsections (a) and (b) do not apply to any residential mortgage or 
    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 305(a)(2) of the Federal 
        Home Loan Mortgage Corporation Act, so as to require the 
        imposition or continuation of a private mortgage insurance 
        requirement beyond the terms specified in subsection (a) or (b) 
        of section 3; 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 amortization schedules 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 or mortgage 
    transaction described in paragraph (1) shall terminate in 
    accordance with subsection (c).
        (3) Rule of construction.--Nothing in this subsection may be 
    construed to require a mortgage or 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 the date of the 
    enactment of this Act, 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). 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.

SEC. 4. DISCLOSURE REQUIREMENTS.

    (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 or mortgage transaction (other than a mortgage 
    or mortgage transaction described in section 3(f)(1)), 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 3(a) of this Act 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 3(a) of this Act 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 3(b) of 
                this Act, 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 3(f) of this Act, 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 3(a) of this Act 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 3(f) of this 
            Act, and whether such an exemption applies at that time to 
            that transaction.
        (2) Disclosures for excepted transactions.--In the case of a 
    mortgage or mortgage transaction described in section 3(f)(1), 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 Act 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 the date of enactment of this 
    Act.
    (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 Act, 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) and paragraphs (1)(B) and (3) 
of subsection (a) may be provided on the annual disclosure relating to 
the escrow account made as required under the Real Estate Settlement 
Procedures Act of 1974, 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.

SEC. 5. NOTIFICATION UPON CANCELLATION OR TERMINATION.

    (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 Act, 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 
    3, 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 3(a), not later than 30 days after the 
        later of--
                (i) the date on which a request is received under 
            section 3(a)(1); or
                (ii) the date on which the mortgagor satisfies any 
            evidence and certification requirements under section 
            3(a)(3); and
            (B) with respect to termination of private mortgage 
        insurance under section 3(b), not later than 30 days after the 
        scheduled termination date.
SEC. 6. DISCLOSURE REQUIREMENTS FOR LENDER PAID MORTGAGE INSURANCE.
    (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 3 through 5 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 or 
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 3(a) of this Act, and could 
        automatically terminate on the termination date in accordance 
        with section 3(b) of this Act;
            (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, 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.
    (d) Standard Forms.--The servicer of a residential mortgage may 
develop and use a standardized form or forms for the provision of 
notices to the mortgagor, as required under subsection (c).

SEC. 7. FEES FOR DISCLOSURES.

    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 Act.

SEC. 8. CIVIL LIABILITY.

    (a) In General.--Any servicer, mortgagee, or mortgage insurer that 
violates a provision of this Act 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 10, 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 10, 
            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 10, 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) 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 Act due to the failure of a mortgage insurer 
    or a mortgagee to comply with the requirements of this Act, shall 
    not be construed to be a violation of this Act 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.

SEC. 9. EFFECT ON OTHER LAWS AND AGREEMENTS.

    (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 Act, and except as provided in paragraph (2), the 
    provisions of this Act 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 
    Act, and any other matter specifically addressed by this Act.
        (2) Protection of existing state laws.--
            (A) In general.--The provisions of this Act do not 
        supersede protected State laws, except to the extent that the 
        protected State laws are inconsistent with any provision of 
        this Act, 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 Act 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 Act; 
                or
                    (II) when a mortgage principal balance is achieved 
                that is higher than as provided in this Act; or

                (ii) requires disclosure of information--

                    (I) that provides more information than the 
                information required by this Act; or
                    (II) more often or at a date earlier than is 
                required by this Act.

            (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 the 
            date of the enactment of this Act; 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 Act 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).

SEC. 10. ENFORCEMENT.

    (a) In General.--Compliance with the requirements imposed under 
this Act shall be enforced under--
        (1) section 8 of the Federal Deposit Insurance Act--
            (A) by the appropriate Federal banking agency (as defined 
        in section 3(q) of the Federal Deposit Insurance Act) in the 
        case of insured depository institutions (as defined in section 
        3(c)(2) of such Act);
            (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 that 
        are not insured depository institutions (as defined in section 
        3(c)(2) of the Federal Deposit Insurance Act); 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 that 
        are not insured depository institutions (as defined in section 
        3(c)(2) of the Federal Deposit Insurance Act);
        (2) the Federal Credit Union Act, 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; 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 act treated as violation of other acts.--
    For purposes of the exercise by any agency referred to in 
    subsection (a) of such agency's powers under any Act referred to in 
    such subsection, a violation of a requirement imposed under this 
    Act 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) 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 Act, 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) shall--
        (1) notify the mortgagee or servicer of any failure of the 
    mortgagee or servicer to comply with 1 or more provisions of this 
    Act;
        (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 Act; 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 Act.

SEC. 11. CONSTRUCTION.

    (a) PMI Not Required.--Nothing in this Act 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 Act 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 Act for the mortgage.

SEC. 12. AMENDMENT TO HIGHER EDUCATION ACT OF 1965.

    Section 481(a)(4) of the Higher Education Act of 1965 (20 U.S.C. 
1088(a)(4)) is amended by--
        (1) inserting the subparagraph designation ``(A)'' immediately 
    after the paragraph designation ``(4)'';
        (2) redesignating subparagraphs (A) and (B) as clauses (i) and 
    (ii), respectively; and
        (3) adding at the end thereof the following new subparagraph:
            ``(B) Subparagraph (A)(i) shall not apply to a nonprofit 
        institution whose primary function is to provide health care 
        educational services (or an affiliate of such an institution 
        that has the power, by contract or ownership interest, to 
        direct or cause the direction of the institution's management 
        or policies) that files for bankruptcy under chapter 11 of 
        title 11 of the United States Code between July 1, and December 
        31, 1998.''.

SEC. 13. EFFECTIVE DATE.

    This Act, other than section 14, shall become effective 1 year 
after the date of enactment of this Act.
  SEC. 14. ABOLISHMENT OF THE THRIFT DEPOSITOR PROTECTION OVERSIGHT 
      BOARD.
    (a) In General.--Effective at the end of the 3-month period 
beginning on the date of enactment of this Act, the Thrift Depositor 
Protection Oversight Board established under section 21A of the Federal 
Home Loan Bank Act (hereafter in this section referred to as the 
``Oversight Board'') is hereby abolished.
    (b) Disposition of Affairs.--
        (1) Power of chairperson.--Effective on the date of enactment 
    of this Act, the Chairperson of the Oversight Board (or the 
    designee of the Chairperson) may exercise on behalf of the 
    Oversight Board any power of the Oversight Board necessary to 
    settle and conclude the affairs of the Oversight Board.
        (2) Availability of funds.--Funds available to the Oversight 
    Board shall be available to the Chairperson of the Oversight Board 
    to pay expenses incurred in carrying out paragraph (1).
    (c) Savings Provision.--
        (1) Existing rights, duties, and obligations not affected.--No 
    provision of this section shall be construed as affecting the 
    validity of any right, duty, or obligation of the United States, 
    the Oversight Board, the Resolution Trust Corporation, or any other 
    person that--
            (A) arises under or pursuant to the Federal Home Loan Bank 
        Act, or any other provision of law applicable with respect to 
        the Oversight Board; and
            (B) existed on the day before the abolishment of the 
        Oversight Board in accordance with subsection (a).
        (2) Continuation of suits.--No action or other proceeding 
    commenced by or against the Oversight Board with respect to any 
    function of the Oversight Board shall abate by reason of the 
    enactment of this section.
        (3) Liabilities.--
            (A) In general.--All liabilities arising out of the 
        operation of the Oversight Board during the period beginning on 
        August 9, 1989, and the date that is 3 months after the date of 
        enactment of this Act shall remain the direct liabilities of 
        the United States.
            (B) No substitution.--The Secretary of the Treasury shall 
        not be substituted for the Oversight Board as a party to any 
        action or proceeding referred to in subparagraph (A).
        (4) Continuations of orders, resolutions, determinations, and 
    regulations pertaining to the resolution funding corporation.--
            (A) In general.--All orders, resolutions, determinations, 
        and regulations regarding the Resolution Funding Corporation 
        shall continue in effect according to the terms of such orders, 
        resolutions, determinations, and regulations until modified, 
        terminated, set aside, or superseded in accordance with 
        applicable law if such orders, resolutions, determinations, or 
        regulations--
                (i) have been issued, made, and prescribed, or allowed 
            to become effective by the Oversight Board, or by a court 
            of competent jurisdiction, in the performance of functions 
            transferred by this section; and
                (ii) are in effect at the end of the 3-month period 
            beginning on the date of enactment of this section.
            (B) Enforceability of orders, resolutions, determinations, 
        and regulations before transfer.--Before the effective date of 
        the transfer of the authority and duties of the Resolution 
        Funding Corporation to the Secretary of the Treasury under 
        subsection (d), all orders, resolutions, determinations, and 
        regulations pertaining to the Resolution Funding Corporation 
        shall be enforceable by and against the United States.
            (C) Enforceability of orders, resolutions, determinations, 
        and regulations after transfer.--On and after the effective 
        date of the transfer of the authority and duties of the 
        Resolution Funding Corporation to the Secretary of the Treasury 
        under subsection (d), all orders, resolutions, determinations, 
        and regulations pertaining to the Resolution Funding 
        Corporation shall be enforceable by and against the Secretary 
        of the Treasury.
    (d) Transfer of Thrift Depositor Protection Oversight Board 
Authority and Duties of Resolution Funding Corporation to Secretary of 
the Treasury.--Effective at the end of the 3-month period beginning on 
the date of enactment of this Act, the authority and duties of the 
Oversight Board under sections 21A(a)(6)(I) and 21B of the Federal Home 
Loan Bank Act are transferred to the Secretary of the Treasury (or the 
designee of the Secretary).
    (e) Membership of the Affordable Housing Advisory Board.--Effective 
on the date of enactment of this Act, section 14(b)(2) of the 
Resolution Trust Corporation Completion Act (12 U.S.C. 1831q note) is 
amended--
        (1) by striking subparagraph (C); and
        (2) by redesignating subparagraphs (D) and (E) as subparagraphs 
    (C) and (D), respectively.
    (f) Time of Meetings of the Affordable Housing Advisory Board.--
        (1) In general.--Section 14(b)(6)(A) of the Resolution Trust 
    Corporation Completion Act (12 U.S.C. 1831q note) is amended--
            (A) by striking ``4 times a year, or more frequently if 
        requested by the Thrift Depositor Protection Oversight Board 
        or'' and inserting ``2 times a year or at the request of''; and
            (B) by striking the second sentence.
        (2) Clerical amendment.--Section 14(b)(6)(A) of the Resolution 
    Trust Corporation Completion Act (12 U.S.C. 1831q note) is amended, 
    in the subparagraph heading, by striking ``and location''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.