[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 318 Engrossed in Senate (ES)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
105th CONGRESS
  1st Session
                                 S. 318

_______________________________________________________________________

                                 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 1997''.
    (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. Effective date.
Sec. 13. 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.

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 $1000 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) Continued application of certain provisions.--This Act 
        does not supersede any provision of the law of a State in 
        effect on or before September 1, 1989, pertaining to the 
        termination of private mortgage insurance or other mortgage 
        guaranty insurance, to the extent that such law requires 
        termination of such insurance at an earlier date or when a 
        lower mortgage loan principal balance is achieved than as 
        provided in this Act.
    (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.

    Nothing in this Act shall be construed to impose any requirement 
for private mortgage insurance in connection with a residential 
mortgage transaction.

SEC. 12. EFFECTIVE DATE.

    This Act, other than section 13, shall become effective 1 year 
after the date of enactment of this Act.

SEC. 13. 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''.

            Passed the Senate November 9, 1997.

            Attest:

                                                             Secretary.
105th CONGRESS

  1st Session

                                 S. 318

_______________________________________________________________________

                                 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.

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