[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.''.