110 HR 3725 IH: Mortgage Disclosure Simplification Act of 2007 U.S. House of Representatives 2007-10-02 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I 110th CONGRESS 1st Session H. R. 3725 IN THE HOUSE OF REPRESENTATIVES October 2, 2007 Mr. Al Green of Texas (for himself and Mr. McHenry) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Real Estate Settlement Procedures Act of 1974 to require the submission to each borrower under a federally related mortgage loan of a one-page description of the essential terms of the loan.
1.
Short title
This Act may be cited as the Mortgage Disclosure Simplification Act of 2007.
2.
Required disclosures regarding loan terms
The Real Estate Settlement Procedures Act of 1974 is amended by inserting after section 4 (12 U.S.C. 2603) the following new section:
4A.
Required disclosures regarding loan terms
(a)
Development
The Secretary, in consultation with appropriate Federal lending regulation agencies, shall develop and prescribe standard written forms under subsection (c) for statement of the essential terms of a federally related mortgage loan. (b)
Requirement To use
The Secretary shall require that— (1)the forms developed pursuant to subsection (a) be used in all transactions in the United States that involve federally related mortgage loans; and (2)that in any such a transaction— (A)the form under subsection (c)(1) shall be appropriately and accurately completed by the lender or mortgage broker, or both; and (B)the completed form under subsection (c)(1) shall be provided to the borrower, together with the form under subsection (c)(2), not later than three days after the application for the federally related mortgage loan is made. (c)
Contents
With respect to a federally related mortgage loan, the standard written forms required under this subsection are as follows: (1)
Statement of loan terms
A single page, written disclosure regarding the federally related mortgage loan that, when completed by the lender or mortgage broker, or both, sets forth, in accordance with such requirements as the Secretary shall by regulation establish— (A)a best possible estimate of— (i)the total loan amount under the federally related mortgage loan; (ii)the loan-to-value ratio for the loan; (iii)the final maturity date for the loan; (iv)the amount and due date for any balloon payment under the loan; (v)the amount of any prepayment fee to be charged if the loan is paid in full before the final maturity date for the loan; (vi)the initial interest rate under the loan expressed as an annual percentage rate, and the amount of the monthly payment due under such rate; (vii)the duration during which such initial interest rate will be charged; (viii)the fully indexed rate of interest under the loan expressed as an annual percentage rate and the amount of the monthly payment due under such rate; (ix)the maximum possible rate of interest under the loan expressed as an annual percentage rate and the amount of the monthly payment due under such rate; (x)the monthly household income of the borrower upon which the loan is based; (xi)the amount of initial monthly payment due under the loan, and the amount of such initial monthly payment plus monthly amounts due for taxes and insurance on the property for which the loan is made, both expressed as a percentage of the monthly household income of the borrower; (xii)the amount of the fully indexed monthly payment due under the loan, and the amount of such fully indexed monthly payment plus monthly amounts due for taxes and insurance on the property for which the loan is made, both expressed as a percentage of the monthly household income of the borrower; (xiii)the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of such charges that are included in the loan amount and the amount of such charges the borrower must pay at closing, the aggregate amount of lender’s fees connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan; and (xiv)the aggregate amount of fees paid to the mortgage broker in connection with the loan, the amount of such fees paid directly by the borrower, and any additional amount received by the broker from the lender based on the interest rate of the loan (commonly referred to as a yield spread premium); (B)a name, telephone number, and electronic mail address that may be used by the borrower to obtain information regarding the loan; and (C)a prominent statement that the amounts to be provided by the lender or mortgage broker, or both, under the federally related mortgage loan shall be subject to final underwriting of the loan. (2)
Statement of definitions and explanations
A two-page written disclosure that sets forth, in accordance with such requirements as the Secretary shall, by regulation, establish, basic easy-to-understand definitions or explanations, of terms relating to residential mortgage loans, including each of the following terms: appraised value, types of loans, initial interest rate, fully indexed rate of interest, maximum possible rate of interest, monthly household income, monthly loan payment including taxes and insurance, fully indexed housing expense ratio, prepayment fee, balloon payment, payment option loan, points, closing costs, settlement services, settlement charges, lender’s fees, and mortgage broker. (d)
Savings clause
Notwithstanding disclosure pursuant to subsection (c)(1)(A) of best possible estimates of the information required under such subsection with respect to a federally related mortgage loan, the amounts to be provided by the lender or mortgage broker, or both, under the loan shall be subject to final underwriting of the loan.
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