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





                                                       Calendar No. 243

105th CONGRESS

  1st Session

                                 S. 318

                          [Report No. 105-129]

_______________________________________________________________________

                                 A BILL

To amend the Truth in Lending Act to require automatic cancellation and 
    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.

_______________________________________________________________________

                            October 31, 1997

        Reported with an amendment and an amendment to the title





                                                       Calendar No. 243
105th CONGRESS
  1st Session
                                 S. 318

                          [Report No. 105-129]

To amend the Truth in Lending Act to require automatic cancellation and 
    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 SENATE OF THE UNITED STATES

                           February 12, 1997

   Mr. D'Amato (for himself, Mr. Bryan, Mr. Dodd, Mr. Domenici, Mr. 
  Kempthorne, Mr. Bingaman, and Mr. Durbin) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

                            October 31, 1997

  Reported by Mr. D'Amato, with an amendment and an amendment to the 
                                 title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
To amend the Truth in Lending Act to require automatic cancellation and 
    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,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Homeowners Protection Act 
of 1997''.</DELETED>

<DELETED>SEC. 2. NOTIFICATION OF CANCELLATION RIGHTS FOR PRIVATE 
              MORTGAGE INSURANCE.</DELETED>

<DELETED>    (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:</DELETED>

<DELETED>``SEC. 126. CANCELLATION RIGHTS FOR PRIVATE MORTGAGE 
              INSURANCE.</DELETED>

<DELETED>    ``(a) Insurance Ratio Standard.--</DELETED>
        <DELETED>    ``(1) In general.--No consumer, in connection with 
        a residential mortgage transaction, shall be required by the 
        creditor to obtain or maintain private mortgage insurance if 
        that consumer has, or will have at the time that the 
        transaction is consummated, equity in the property that is the 
        subject of the transaction in excess of the private mortgage 
        insurance ratio.</DELETED>
        <DELETED>    ``(2) Regulatory requirement.--The Board--
        </DELETED>
                <DELETED>    ``(A) shall issue rules to implement 
                paragraph (1); and</DELETED>
                <DELETED>    ``(B) may issue rules exempting certain 
                classes of transactions from the provisions of 
                paragraph (1) if the Board finds that such exemption is 
                necessary--</DELETED>
                        <DELETED>    ``(i) to ensure sound underwriting 
                        standards; or</DELETED>
                        <DELETED>    ``(ii) to further the availability 
                        of credit to persons who might otherwise be 
                        denied credit if paragraph (1) was applied to 
                        residential mortgage transactions involving 
                        such persons.</DELETED>
<DELETED>    ``(b) 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 to the consumer the current private 
mortgage insurance ratio for the subject property, in writing, at the 
time that the transaction is entered into.</DELETED>
<DELETED>    ``(c) Information Required To Be Disclosed.--With respect 
to each residential mortgage transaction, the creditor shall disclose 
to the consumer, in writing, the following information at the time the 
transaction is entered into:</DELETED>
        <DELETED>    ``(1) Identifying information.--Such information 
        as may be necessary to permit the consumer to communicate with 
        the creditor or any subsequent servicer of the mortgage, 
        concerning the private mortgage insurance of that 
        consumer.</DELETED>
        <DELETED>    ``(2) Cancellation procedures.--The procedures 
        required to be followed by the consumer in canceling the 
        private mortgage insurance.</DELETED>
<DELETED>    ``(d) 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, beginning with the first such statement following the 
date of enactment of the Homeowners Protection Act of 1997, while such 
insurance is in effect, but not less than annually--</DELETED>
        <DELETED>    ``(1) the information required to be disclosed 
        under subsections (b) and (c); or</DELETED>
        <DELETED>    ``(2) a clear and conspicuous written statement 
        containing--</DELETED>
                <DELETED>    ``(A) a statement that the consumer may 
                cancel the private mortgage insurance and a description 
                of the circumstances under which such a cancellation 
                may be made; and</DELETED>
                <DELETED>    ``(B) an address and telephone number that 
                the consumer may use to contact the creditor or the 
                person servicing the mortgage.</DELETED>
<DELETED>    ``(e) Notices Furnished Without Cost to the Consumer.--
</DELETED>
        <DELETED>    ``(1) In general.--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.</DELETED>
        <DELETED>    ``(2) Reimbursement.--A creditor or subsequent 
        servicer of the mortgage may seek reimbursement from the issuer 
        of the private mortgage insurance, with respect to any cost 
        incurred by that creditor or subsequent servicer in providing 
        any notice or information to the consumer pursuant to this 
        section.</DELETED>
<DELETED>    ``(f) Existing Mortgages.--If a consumer was required to 
obtain and maintain private mortgage insurance as a condition for 
entering into a residential mortgage transaction occurring before the 
date of enactment of the Homeowners Protection Act of 1997--</DELETED>
        <DELETED>    ``(1) not later than 180 days after that date of 
        enactment, the creditor shall disclose, in writing, to each 
        such consumer--</DELETED>
                <DELETED>    ``(A) the information described in 
                paragraphs (1) and (2) of subsection (c); and</DELETED>
                <DELETED>    ``(B) that the private mortgage insurance 
                may, under certain circumstances, be canceled by the 
                consumer at any time while the mortgage is outstanding; 
                and</DELETED>
        <DELETED>    ``(2) the person servicing the mortgage shall 
        include in or with each written statement of account provided 
        to the consumer, beginning with the first such statement 
        following the date of enactment of that Act, while such 
        insurance is in effect, but not less than annually--</DELETED>
                <DELETED>    ``(A) the information required to be 
                disclosed under subsection (c); or</DELETED>
                <DELETED>    ``(B) a clear and conspicuous written 
                statement containing--</DELETED>
                        <DELETED>    ``(i) a statement that the 
                        consumer may be able to cancel the private 
                        mortgage insurance (if such is the case); 
                        and</DELETED>
                        <DELETED>    ``(ii) an address and telephone 
                        number that 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.</DELETED>
<DELETED>    ``(g) Definitions.--In this section, the following 
definitions shall apply:</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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 Housing Act of 1949.</DELETED>
        <DELETED>    ``(3) Private mortgage insurance ratio.--The term 
        `private mortgage insurance ratio' means a principal balance 
        outstanding on a residential mortgage equal to less than 80 
        percent of the original value (at the time at which the 
        consumer entered into the original residential mortgage 
        transaction) of the property securing the loan.</DELETED>
<DELETED>    ``(h) Applicability.--This section, other than as provided 
in subsection (d), shall apply with respect to residential mortgage 
transactions entered into beginning 90 days after the date of enactment 
of the Homeowners Protection Act of 1997.''.</DELETED>
<DELETED>    (b) 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:</DELETED>

<DELETED>``126. Cancellation rights for private mortgage insurance.''.

</DELETED>SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeowners Protection Act of 1997''.

SEC. 2. DEFINITIONS.

    In this Act, the following definitions shall apply:
            (1) Cancellation date.--The term ``cancellation date'' 
        means (at the option of the mortgagor) the date on which the 
        principal balance of a residential mortgage--
                    (A) 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
                    (B) based on actual payments, reaches 80 percent of 
                the original value of the property securing the loan.
            (2) 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.
            (3) Initial amortization schedule.--With respect to--
                    (A) a residential mortgage for which the interest 
                rate is not subject to change, the term ``initial 
                amortization schedule'' means a schedule established at 
                the time at which a residential mortgage transaction is 
                consummated, showing--
                            (i) 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
                            (ii) the unpaid principal balance of the 
                        loan after each scheduled payment is made; and
                    (B) a residential mortgage for which the interest 
                rate is subject to change, the ``initial amortization 
                schedule'' shall be based upon the interest rate or 
                rates applicable to the residential mortgage on the 
                date on which the transaction is consummated.
            (4) 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.
            (5) 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.
            (6) Mortgagee.--The term ``mortgagee'' means the holder of 
        a residential mortgage at the time at which that mortgage 
        transaction is consummated.
            (7) Mortgagor.--The term ``mortgagor'' means the original 
        borrower under a residential mortgage or his or her successors 
        or assignees.
            (8) 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.
            (9) 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.
            (10) 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.
            (11) 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.
            (12) 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.
            (13) Single-family dwelling.--The term ``single-family 
        dwelling'' means a residence consisting of 1 family dwelling 
        unit.
            (14) Termination date.--The term ``termination date'' means 
        the date on which the principal balance of a residential 
        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.

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 by 
                the holder and made known to the mortgagor 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 Housing Opportunity Programs and 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 by guidelines published by the 
                Federal National Mortgage Association and Federal Home 
                Loan Mortgage Corporation, 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 accordance 
                with guidelines that are identical to the guidelines 
                published under subparagraph (A).
            (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) a written initial amortization schedule; and
                    (B) 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.
            (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 holder of a residential mortgage (or 
        a servicer acting on behalf of that holder) 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; and
            (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.
    (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 inflation 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, mortgage insurer, or 
holder of a residential mortgage that violates a provision of this Act 
shall be liable to each mortgagor to whom the violation relates for--
            (1) actual damages;
            (2) in the case of an action by an individual, such 
        additional damage as the court may allow, not to exceed $1,000;
            (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, a mortgagee, or a holder of a residential mortgage 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 mortgagee or mortgage insurer or 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. CONSTRUCTION.

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

SEC. 11. EFFECTIVE DATE.

    This Act, other than section 12, shall become effective 1 year 
after the date of enactment of this Act.

SEC. 12. 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''.
            Amend the title so as to read: ``A Bill 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.''.